ACC Levy Confirmation & the impact on large employers

ACC Levy Confirmation & the impact on large employers

The ACC has recently consulted on what the levy rates will be from 1 April 2022 – 31 March 2025 and the Minister has confirmed changes.

Across the three accounts work, earners and motor vehicle for the most recent cover year 20/21 there is a shortfall of $1.39 billion.
Duration, frequency, number and costs of weekly compensation claims have significantly increased across each account - there is simply not enough levy collected to pay for claims costs.

The table below highlights the impact on the levy rates by account.

The real cost to employers 

For large employers (>$10,000 levy) ACC’s experience rating had provided discounts of 50% and penalties of 75%. From 1 April 2022, ACC is wanting to amend again from 50% discounts to 100% penalties.  

The levy an employer pays and potential penalties is largely driven by how effective ACC manages weekly compensation claims. ACC has stated claims performance is decreasing, the impact is the potential for increased penalties to employers being higher. Employers are also mentioning that they cannot access the ACC system to discuss quicker return to work, which is negatively impacting on days off work and administration time for employers. 

ACC’s deteriorating performance impacts days off work. For every 1000 employees there are over 3,000 days that employees are unable to work as a result of ACC injuries. Ten years ago this number was less than 1,500 days off work. 
 

What are the options?

There are only two options for large employers:

1. Have no work injuries

2. Self-manage through the Accredited Employer Programme (AEP)*.

The AEP allows employers to receive significant discounts and take over responsibility for managing the work injuries. Approximately 23% of New Zealand employees work for an employer in AEP.

The financial risk under the programme can be significantly lower than standard ACC, there is significantly quicker return to work and better outcomes for employer and employees. 

As a result of improved performance outcomes, employers can also have their employee non-work claims managed by a third party. For employers it provides an option to reduce risk, reduce time off work, receive discounts and most importantly ensure quicker support and rehabilitation outcomes for injured employees.

*AEP is suitable for employer paying more than $120,000 in standard levy per annum.