ACC Cover Plus explained
ACC’s Standard CoverPlus provides up to 80% of your income as weekly compensation if you’re unable to work due to an accident.
This compensation is calculated based on your declared taxable income from the previous financial year and your Industry Classification Unit (ICU), which reflects your occupation type (e.g. builder, accountant, engineer).
For example, if your annual income is $150,000, ACC will compensate you based on the maximum earnings cap of $136,544. This results in a pre-tax annual payout of $109,235, or approximately $2,100 per week.
What is ACC CoverPlus Extra (CPX)?
CPX is an optional agreed value income protection insurance that covers self-employed people and non-PAYE shareholder-employees that can negotiate a pre-agreed level of loss of earnings compensation.
This way, you know exactly how much you’ll receive each week if you are injured and can’t work. However, compared to a private income protection policy, ACC is an expensive type of cover.
In addition, if you choose CoverPlus Extra, this will replace your standard CoverPlus cover.
CPX is especially suited to those who:
- have fluctuating income, either yearly or seasonal
- want to apply for more or less cover than your actual income
- is newly self-employed with no earnings history and wants assurances around your cover.
- want to reduce the CoverPlus Extra levy and get private insurance
- if your business would continue generating income if you were injured and couldn’t work
- you might split your income with a partner or spouse or take advantage of options to reduce your tax.
CoverPlus Extra has several important advantages above the default ACC CoverPlus, which is more beneficial.
ACC Cover Plus vs ACC Cover Plus Extra: Restructuring Levy's
Using ACC CoverPlus as the only source of income protection can be tricky.
If you are diagnosed with an illness, you will not be eligible for ACC benefits. Instead, you must rely on Work and Income (WINZ) until you can return to work.
In addition, there are specific gaps in terms of disease and degeneration, and switching to Cover Plus Extra is the first step toward filling those gaps.
Solutions for self-employed and non-PAYE shareholder employee
If you are self-employed or a non-PAYE shareholder employee, various options are available to upgrade your cover to Cover Plus Extra and save some money.
Non-PAYE Shareholders can change their ACC classification codes with ACC CoverPlus Extra (occupation codes that determine your level of risk and levies).
There are relatively few instances in which ACC CoverPlus Extra would not benefit business owners or sole traders, and it is free to set up. As a result, many New Zealanders have benefited from reclassification.
Self-employed and contractors have more options with ACC CoverPlus Extra. For instance, If you have a life insurance policy and private income protection or are applying for it, you may be able to reduce your ACC cover to lower your levies.
ACC CoverPlus vs ACC CoverPlus Extra
We can look at strategies to reduce your level of cover with ACC and save you money on levies.
We can then invest the levies saved in a private insurance package that pays you and ACC in the event of an accident and covers illness-related events, giving you the best of both worlds and better outcomes at claims time.
ACC CoverPlus
- Invoiced based on your last year’s financial earnings
- Pays 80% of your previous years earnings (limits and conditions apply)
- Will be reduced if your business continues to generate income during your time off work
- Will reduce even further as you return to work on a part time basis
- You must prove loss of income
ACC CoverPlus Extra
- Clarity at claim time
- Invoiced based on your level of agreed cover
- Pays 100% of that agreed cover
- It does not conflict with continued business income
- Pays 100% of benefit as you return to work part-time
- You do not have to prove your loss of income
There are only a handful of situations where ACC CoverPlus Extra isn’t the best choice for business owners or sole traders.
LifeCovered, the income protection broker, can assist you in changing your ACC protection.
Find out more
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FAQ's
What is the difference between CoverPlus and CoverPlus Extra?
The main difference between CoverPlus and CoverPlus Extra is the amount of lost earnings compensation you receive. With CoverPlus Extra you get 100% of the amount you negotiate. Because you have agreed on your cover, you will be receiving compensation sooner.
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