Your Money and careers writer for the NZ Herald

Diana Clement: Navigate ACC's yays and nays

Kiwis should be aware of what's covered - and not.
Most of us will have benefited from ACC at some time in our lives.
Most of us will have benefited from ACC at some time in our lives.

We're lucky. Few countries have such an all-encompassing no-fault accident compensation scheme as we do in New Zealand with ACC.

Most of us will have benefited from ACC at some time in our lives. Some have been saved from a life of poverty or had operations immediately without waiting.

Unless you work for ACC, are a lawyer, or one of those claimants who have made it their life's work to fight ACC, there's a good chance you don't know the details of what it does and doesn't cover.

Who would know, unless they've experienced it, that ACC pays for the cost of a memorial service if a body isn't found following an accident, or that it can turn down your claim for a genuine accident if your symptoms are partially or wholly caused by the ageing process?

It's worth reading the "What Support Can I Get" page on the ACC's website. There are all sorts of benefits that the majority of people don't know about.

To save you the time, here is some of the cover that you and I pay for and may need one day:

If you die in an accident, ACC will pay 80 per cent of your wages or salary to your family or a portion of that to the children's carer for a period of time. There are also childcare payments up to the age of 14.

There are special payments for prescriptions, home modifications, vocational rehabilitation, travel and accommodation, attendant care, services for hearing loss and many other payments.

Treatment "injuries" are covered by ACC. That might be a condition such as stroke or heart attack that wouldn't be viewed normally as an "accident". But because the condition was caused by a medical accident, you're covered. You need to prove that the injury or condition wasn't an ordinary consequence of the treatment.

Many Kiwis don't realise they're covered for mental injuries such as post-traumatic stress disorder relating to sexual abuse and can get free counselling through ACC.

The problem with that is that you'll invariably find a self-employed person on their mobile phone from a hospital bed making sure the business is still running.

There are a lot of complaints about ACC, some fair and others not. The complaints arise when someone has an accident and finds they're not covered, don't receive what they expect or are told that their injury isn't "accidental" but a result of ageing.

Sometimes ACC accepts an initial claim for a trip to the doctor, hospital or physio. If the injury needs further expensive operations or treatment or you are off work for an extended period of time, ACC can choose to do more investigation and if it finds evidence that the cause wasn't an accident you won't get any further payments.

One especially tough rule that leads to complaints, says lawyer Philip Schmidt of Schmidt and Peart Law, is from self-employed people who discover following their accident that they're only entitled to weekly payments totalling 80 per cent of what they've declared as their income to the Inland Revenue Department (IRD), not what they really earned.

If they have split their income with their partner for tax reasons, they get only 80 per cent of the income they assigned to themselves even though the business earns nothing without them working in it.

Even worse, says Schmidt, are the self-employed people whose companies pay them dividends, not a shareholder salary. Dividends are viewed by ACC as passive income and as a result the claimant isn't seen as earning income from their work and therefore is not entitled to any weekly compensation.

Business owners with genuine ACC claims are finding that if they have any connection or intellectual input with the business while they're off on ACC weekly compensation, their compensation is clawed back.

The problem with that is that you'll invariably find a self-employed person on their mobile phone from a hospital bed making sure the business is still running. "I think that is really being unfair," says Schmidt.

Self-employed people sometimes sign up for ACC's CoverPlus Extra (CPX), which allows them to negotiate a pre-agreed level of lost earnings compensation and overcome the artificially low income they declare to the IRD. I've written about CoverPlus Extra in the past ( CPX doesn't solve the dividend versus shareholder salary issue.

Whether you're employed or self-employed, taking time out of work for a sabbatical or between jobs can invalidate your ACC entitlement for weekly compensation.

Medical and disability insurance adviser Jon-Paul Hale of Willowgrove Consulting says the time frame often surprises people. "[If] 28 days after stopping work you do not have a job to return to within 90 days, ACC can consider you a non-earner for weekly compensation. In these situations, ACC [will pay] for the treatment but will not pay for the lost income during recovery."

In that case, says Hale, Kiwis should pay for ACC's TimeOut cover as well as income protection insurance. The TimeOut cover lasts for a work break of up to 24 months. TimeOut will pay out for up to five years if you are injured by accident.

ACC's rules can be a blunt instrument. For example, former Rotorua resident Cheryle Brider contracted HIV from her husband, who was infected through a blood transfusion, and passed it on to her son. The husband was covered for medical misadventure, but ACC declined to pay for Cheryle and their son's treatment because the medical misadventure didn't happen directly to them. Wellington lawyer John Miller took their case to the High Court and won.

Another problem for those of us who haven't read all 344 pages of the Accident Compensation Act 2001 and the numerous judgments by courts is that there's a fine line between what's an "accident" and what ACC sees as ageing or illness. ACC does pay for a condition that comes on gradually because of your work. However, it sometimes argues hard that the injury has been contributed to materially from non-work activities, says Schmidt.

Schmidt, who specialises in ACC claims, has stories to tell about Catch-22 situations faced by many of his clients. Some have come to him after being asked to prove that they had a greater risk of suffering injury from their work than the population at large. If, however, studies had not been done on their exact line of work and condition, they cannot prove that the cause was work.

The ACC Act has a get-out clause for injuries that it says are "wholly or substantially" caused by ageing. If you twist your knee, and ACC's experts find arthritis in your knee joint, the cause could be argued to be wholly or substantially due to ageing.

The gotcha is that if you use a certain part of your body for work, chances are it will age more quickly than if it wasn't so used. "Then they say it is caused by ageing," says Schmidt, although ACC is relying on that clause less than it used to.

Stories abound of ACC claimants automatically being told their injuries were caused by ageing or other medical causes and the onus then lies on them to fight the system.

A classic case is truck driver Llana Salanoa who jarred her shoulder while "twitching" logs from her logging vehicle. ACC sent Salanoa to two doctors who ruled that the problem was frozen shoulder. Salanoa found herself out of work and unable to claim compensation.

Debate on this article is now closed.

- NZ Herald

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Your Money and careers writer for the NZ Herald

Diana Clement is a freelance journalist who writes about personal finance and careers. She has worked as a journalist for more than 25 years in both New Zealand and the UK. Diana has contributed to a large number of local and international publications. Her pet topic is the secrets of saving money.

Read more by Diana Clement

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