Getting home and hosed on your ACC

The following article provides general ACC advice in relation to self-employment, tailored to Real Estate Agents.  It was written in July 2017 for REINZ magazine, on behalf of Matt Thomson, ACC and Insurance Savings specialist at Plus4 Insurance Solutions.

Reproduced here as a sample of my insurance writing, I recommend that you seek ACC and insurance advice specific to your personal situation.

As a Real Estate Agent, you typically encounter peaks and troughs in income.  If you had an accident, you don’t want ‘bad timing’ to whittle away your ACC entitlement.

If you’ve ever asked yourself the question, “What am I paying my ACC bill for?”, as a professional insurance agent with real estate clients, I aim to give you some straight-shooting answers.

This article focuses primarily on the income replacement aspect of ACC as it applies to ACC Cover Plus (the standard, default option for self-employed people).

Why pay ACC?

ACC provides you with medical treatment if you’re injured through an accident.  Where the injury causes you to be unable to work, ACC provides an income until you’re able (or deemed to be able) to work more than 10 hours per week.

How are your ACC levies calculated?

Your annual ACC levy is charged based on your previous year’s earnings.  When your income is submitted to IRD for the new financial year, your bill is re-assessed.  Similar to income tax, you’re billed provisionally based on your previous year’s earnings.

What should you prove to get paid?

If you lodge a claim, a Case Manager will check that you’re still working as a Real Estate agent. You’ll then need to do some running around to:

  • Prove your financials and financial loss
  • Gain agreement that your injury is due to accident and not degeneration (aging/an old injury).

Having met these requirements, you’re entitled to 80% of last year’s gross earnings, paid weekly, net of tax.

What are the ‘red flags’?

  •  First year on the job? Without financials to prove earnings, it’s difficult for ACC to pay
  • Dialled down your declared earnings? If your declared earnings are less than what you actually earn (e.g. due to financial expenses), your ACC payment will follow suit, paying 80% gross of declared rather than actual income
  • Not working before your injury? During the claim assessment process, your Case Manager may conclude that you haven’t actively worked as a Real Estate Agent in the four weeks prior to your injury. If this is the case, you may not get paid at all
  • Having a boomer sales period? If you’re doing substantially better in the year of your injury than in the previous year, your ACC compensation will be limited to last year’s income
  • It’s not a clear-cut accident? If ACC deems the severity of your injury to be based on degeneration, they don’t have to compensate you
  • Able to return to work in a limited capacity?  After an injury is signed off as able to withstand more than 10 hours’ work per week, this starts an abatement process where ACC will reduce compensation by the hours they assess as being fit for work.

How can you ‘get closure’ on your ACC?

In Real Estate, having a mutually agreeable contract is key and ACC can operate on this same basis.

To give you certainty, both on what you pay in levies and what you’re entitled to receive, the first thing to do is to get an agreed value ACC contract, i.e. ACC Cover Plus Extra.  For a similar or lower price to what you currently pay, an ACC Cover Plus Extra contract can:

  • Give you certainty on the amount you’d be paid on claim
  • Get your claim paid sooner. Because the sum is agreed, there’s no need to prove your financial loss or earnings at claim time
  • Let you focus on recovery. Agreed value contracts pay the agreed sum until 100% of the pre-accident hours are reached.

How can you get maximum income replacement?

Your biggest asset is you; your ability to earn.  Because the amount of accident cover is agreed, ACC Cover Plus Extra typically costs less than a standard ACC Cover Plus contract.

This can free up funds previously committed to accident-only cover, to covering you for illness as-well, giving you clarity on degenerative injuries.  This cover is available through Income Protection Insurance.

If you already have Income Protection Insurance and you’re paying under the default ACC (Cover Plus) option, you may be doubling up on your cover and paying much more than you need to.

Get a professional assessment

Most of us would never sell a house without consulting an agent that we deem to be an expert in the local market.

Similarly, many experienced insurance brokers charge nothing for their advice and may save you thousands. By receiving specialised advice to ensure that your ACC and personal insurance work together, you put yourself and your loved ones in a prime position to get back on your feet sooner.


Health or Trauma insurance…your best chance of recovery

A sick child is no fun, but a sick Mum is even worse!  Our health is a top priority, but many of us have felt at the mercy of feeling ill, either through a simple flu or something more serious.

While many of us just badger on through the usual winter ailments, if we’re really sick, we quickly realise that we’ve got no choice but to surrender.

Our health and well-being is the cornerstone of life.  When it comes to insuring it, there are two pathways: Health insurance and/or Trauma insurance.

Health insurance is broadly a surgical/private hospital policy that pays on a reimbursement basis, up to policy limits.  Trauma insurance pays a lump sum upon diagnosis of some 48 medical conditions, requiring a survival period of at least 14 days.

Which insurance is superior and can you get by with just one?

First up, as nothing substitutes insurance advice that is both professional and personalised, I recommend that you discuss your age, budget, medical concerns/history and current financial health with a good broker (I’m happy to give recommendations) before a decision is made on what insurance cover is put in place for you.

Below are a few guiding principles to jump-start your decision-making process.

  1. Do you have existing savings?

Health insurance generally covers elective services that could be delayed in the public health system.  The public system waitlist guideline is generally 120 days for non-urgent treatment, however there are exceptions to this.  Early diagnosis and choice of specialist can be significant advantages to being proactive about your health, catching symptoms early and avoiding delays in treatment.

Health insurance reimburses the insured person (or policy owner) or in some cases, reimburses a recognised provider directly.  One of the great benefits of health insurance is the ability to receive surgical cover up to the actual cost of surgery (without a limit applied.  However, specific limits and Usual, Customary and Reasonable (UCR) charges may apply to other benefits such as specialists and tests, meaning that the the total cost of the treatment (including ancillary costs such as travel, accommodation, follow-up treatment and medical incidentals) may be above the amount covered by the policy.

If you don’t currently have a financial buffer in place in the way of savings and sick leave, strauma (and income) insurances are a wise safeguard.

  1. Do you have existing health concerns?

Both health and trauma insurance require health evidence and may exclude certain conditions.

Certain health insurance policies may cover pre-existing conditions after a specified time period, e.g. three years.  If you do have existing health concerns or history, the benefit of using an insurance adviser (over going direct yourself), is that a broker can deliver the best cover terms for you, ‘shopping’ the deal among a few insurers to determine the best acceptance terms for you.

  1. What are your existing financial commitments?

With a lump sum pay-out (and a portion paid for early stage cancers), the blessing of having Trauma insurance is that the money can be used for whatever you choose.  It can buy time (to recover), choice of treatment and cover ongoing rehabilitation and lifestyle changes of your choice.

In essence, you can spend trauma insurance however you like to alleviate financial pressure and help you recover.

On the downside, the policy is generally limited to set definitions for medical conditions.  You must reach the level of severity specified in the policy before a claim is paid, meanwhile, you may be unable to work.  This is where a tailored insurance recommendation consisting of income cover, trauma and/or health insurance and life insurance really comes into its own.