Determining the right ACC cover for your business (Pharmacy Guild – February 2014)

Atul Mehta from Moore Stephens Markhams Chartered Accountants explains the difference between personal injury protection options from the Accident Compensation Corporation (ACC).

Summary

All self-employed and shareholder employees in your pharmacy/pharmacies need some form of ACC cover. ACC CoverPlus is the default policy that applies.

ACC CoverPlus Extra can provide a better solution as you can negotiate the level of cover to ensure 100% of what you need is received in the event of an accident.

The ACC Workplace Safety Discount programme can offer you a 10% discount on your levies if you meet the criteria.

Protection against the consequences of personal injury is an important part of operating any business, including pharmacy. Options available include: ACC CoverPlus, ACC CoverPlus Extra, no cover, or acquiring insurance from a private provider.

All self-employed and shareholder employees should have some form of ACC cover. If no action is taken, ACC CoverPlus is the default policy that will apply to you.

Standard cover

ACC CoverPlus provides 24/7 cover for all workplace injuries, weekly compensation based on 80% of an individual’s earnings and access to a full range of medical and rehabilitation benefits. However, in self-employed or shareholder employee situations, this policy may not provide a satisfactory level of compensation and the requirements to satisfy a claim can be onerous. For example, a person’s prior year income tax return may not be sufficient to prove their loss of earnings.

ACC CoverPlus Extra

ACC CoverPlus Extra can provide a better option. It has all the standard benefits of ACC CoverPlus plus you can negotiate the level of cover so that 100% of earnings are received if an accident occurs. There is also no requirement to prove loss of earnings when making a claim. The additional cost of the cover is approximately 4% more than the default cost.

An example

A self-employed pharmacist injures a leg and his doctor issues him with a certificate stating a recovery period of six weeks.

If the pharmacist has ACC CoverPlus, he would have to report to ACC to confirm the number of hours worked each week to determine his entitlement to compensation and prove his loss of earnings, which can be difficult if his income fluctuates from year to year.

Compare this to ACC CoverPlus Extra, under which the pharmacist has previously agreed cover for $800 per week, which ACC will pay as weekly compensation with no adjustments and no requirements to conform loss of income.

A shareholder-employee with no PAYE or shareholders salary allocation from the company would by default have no ACC cover, however they can apply for ACC CoverPlus Extra.

How to reduce your ACC levies?

There are several ways to reduce your ACC levies through complying with programmes that offer you a discount. The most suitable for a pharmacy business is probably the ACC Workplace Safety Discount programme. This programme offers you a 10% discount on your ACC work cover levies. For this, you need to demonstrate you have appropriate experience in workplace health and safety and are able to provide evidence of the health and safety systems implemented in your business.

Private insurers offer additional options for accident and sickness cover through one of the commercial insurers. In some cases, a combination of both ACC and private cover may provide the best solution.

Each individual or business should evaluate their own circumstances, risks and associated costs to determine the best option. Speak to your business advisor if you require any assistance with this.

Published in Contact Magazine February 2014 written by Atul Mehta.

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