YOUR MIDWIFERY BUSINESS

navigating ACC for self-employed midwives

MICHAEL STIRLING FINANCE MANAGER, MMPO

WHO IS ACC? The Accident Compensation Corporation (ACC) is a Crown entity, originally established in 1974, which brought together various compensation schemes and related work-safe laws. Its principal governing Act is the Accident Compensation Act 2001 and the organisation is governed by a board, answerable to the Minister for ACC.

WHO IS COVERED BY ACC? ACC provides compulsory insurance cover for personal injury for everyone in New Zealand, whether a citizen, resident, or visitor. This means if you are injured by an accident in New Zealand, ACC may pay compensation, as well as some of your medical and rehabilitation costs.

WHAT STANDARD LEVEL OF COVER DOES ACC PROVIDE? ACC provides 24/7, no-fault personal injury cover for everyone in New Zealand, including a range of cover for motor vehicle, non-work, and workplace injuries. ACC only covers injuries; however, your injury must be the direct result of an accident, and not the result of any pre-existing medical conditions. ACC does not cover illness, conditions from ageing, or emotional issues. If you want specific cover for these particular cases, you will need to consider separate income protection cover, which an insurance broker will be able to advise about. ACC may also assist with full or partial funding towards medical, health and other ongoing rehabilitation and treatment costs resulting from the injury, provided your claim has been accepted.

HOW ARE ACC LEVIES CALCULATED FOR THE SELF-EMPLOYED? ACC uses Business Industry Classification Codes (BIC), assigned to your business by way of a Classification Unit (CU). CUs group businesses together with similar levels of risk, in order to determine the levy rate to be paid, ensuring the costs of injuries are shared equitably across industries.

ACC assigns the levy rates to CUs based on historical data from past claims. In general, the higher the occupational risk (based on past claims received), the higher the future levies will be when compared to lower-risk, profiled occupations. Annually, when you file your personal Income Tax Return (IR3) with Inland Revenue, your taxable income details are automatically shared with ACC and the basis for your levy calculation is determined by the business structure you operate under.

HOW MUCH WILL MY ACC LEVY BE FOR THE YEAR ENDED 31 MAR 2022? Based on the BIC Code of Q853955 and CU Code of 86132 ‘Midwifery Service’, the current prescribed rate set by ACC is $1.78 plus GST per $100 of net profit. Use the range table below in order to determine the approximate ACC levy payable next year (GST exclusive), based on your annual net earnings derived from performing midwifery services (see below).

HOW DOES THE ACTUAL CLAIMS PROCESS WORK IN PRACTICE? If you need ACC cover for an injury, as soon as practically possible, visit your trusted health provider: be it your doctor, physiotherapist, Medical Centre, or local Emergency Department. A claim will be lodged by your health professional with ACC on your behalf, and if appropriate, a medical certificate issued, noting the period you are unable to work for. ACC will then consider the claim and confirm in writing whether you are eligible or not.

If you are covered, ACC will request proof of earnings by way of previous years’ income tax returns and financial statements, and possibly net income details for the current financial year to date as well. If your claim is considered ‘standard’, ACC allow up to 21 days for processing.

APPROXIMATE ACC LEVY PAYABLE FOR YEAR ENDING 31 MARCH 2022

2,500

2,000

1,500

1,000

500 $712 $1,068 $1,424 $1,780 $2,136 $2,330

0

40,000 60,000 80,000 100,000 120,000

130,911 (maximum)

If you are rightfully approved for weekly compensation, ACC will pay you based on up to 80% of your taxable income, to a maximum level of $130,911. Depending on the situation and claim, ACC may start paying immediately, but typically, payments will start after one week, with income tax generally deducted at source.

HOW LONG AM I COVERED FOR? Once your claim has been successfully approved by ACC, you will be assigned a case manager, whose main responsibility is to professionally assess your injury and assist with co-ordinating your rehabilitation and recovery back into the workplace. You shall continue to receive weekly compensation from ACC until such time as you are rehabilitated and able to return to normal work duties. If initially, you are only able to revert to light duties, then ACC may reduce your weekly amount, generally pro-rated, based on the number of hours you can physically work.

If you have, or suffer from, a permanent injury, ACC may cover you long-term. You will need to lodge a separate application for financial support and ACC may agree to either a one-off lump sum payment, or ongoing payments, based on a reassessment process, including the use of impairment thresholds, in order to determine the longterm nature and prognosis of the injury.

WHAT ONGOING TREATMENT AND OTHER OUT-OF-POCKET EXPENSES AM I ELIGIBLE FOR? ACC can only help pay for your treatment when it is:

• the most suitable option for your condition • a generally accepted form of treatment in

New Zealand

• given to you by a New Zealand registered and licensed provider.

ACC will generally assist with home-help costs and may assist with certain out-ofpocket expenses, determined on a case-bycase basis, e.g. travel costs incurred to attend specialist appointments.

Note, many services are not fully subsidised by ACC; in fact in many cases, surcharges apply, meaning the claimant must cover a portion of the cost themselves. Doctor visits and physiotherapy treatments are prime examples of this, whereby you are expected to pay such practitioners the shortfall that ACC does not fully subsidise.

For more specific guidance, check out ACC’s website, which publishes a wealth of information on what services they both do, and do not fund.

IS THERE AN ALTERNATIVE TO THE STANDARD LEVEL OF ACC COVER? As soon as you commence self-employment in New Zealand, you are automatically covered by ACC CoverPlus. However, ACC offers another product, ACC CoverPlus Extra (CPX), which is essentially an insurance policy, whereby a mutually agreed level of cover is negotiated up-front. In practice, this means if you cannot work due to an injury, you shall receive compensation based on the ‘sum insured’ cover that you have signed up for, with no requirement to supply additional paperwork validating your net income. This is a desirable outcome, particularly at a time when you simply want to focus on your recovery, and not worry about your immediate finances.

Under CoverPlus Extra, the minimum level of cover that can be taken out is $29,453; and the maximum level is set at $130,911. The good news here is, you will not pay any ACC levies on earnings above this maximum, but the bad news is, you will not have any cover for any excess earnings derived above this current threshold.

However, this is where having personal income protection insurance sitting in tandem with your CPX policy comes cleverly into play, given you will be covered under both eventualities of injury and illness.

Income protection insurance is a whole separate topic in itself, not covered in this article, thus, we strongly recommend this is discussed with an insurance broker.

Note: people’s circumstances are different, so there is not a one-size-fits-all approach. Instead, a broker will be able to tailor a balanced insurance package for you, taking into account all known factors and variables, including a cost/benefit exercise based on your own risk profile, personal finances and family situation. square

MMPO, the Midwifery and Maternity Providers Organisation provides self employed community midwives with a supportive practice management system.

www.mmpo.org.nz mmpo@mmpo.org.nz 03 377 2485