Proposal 4: New pricing options for the Partnership Discount Plan

Background

There are two AEP pricing plans for AEs to choose from:

  • the Partnership Discount Plan (PDP)
  • the Full Self Cover (FSC) plan

Under both plans, AEs assume responsibility and bear the cost for the treatment, compensation and management of all work-related injuries suffered by their employees during a cover period (1 April to 31 March). In addition, they continue to assume these responsibilities for cover-period injuries for a further Claims Management Period (CMP) of up to 4 years after the end of the cover period. At the end of the CMP, the management of the claims is passed to ACC.

Under the PDP plan an AE’s cover period liability for an employee ends at the completion of the CMP. Under the FSC plan, the AE continues to have cover-period liability for an employee for the rest of the employee’s life.

The 2 types of pricing plan are summarised in the tables below:

Partnership Discount Plan (PDP)

Claim Management Period (CMP) Liability Average downward adjustment
1 year Limited to CMP 50%
2 years 58%
Optional cover Approx. cost
Stop-Loss Limit +0.1% to +30%
High-Cost Claim Cover N/A

Full Self Cover (FSC)

Claim Management Period (CMP) Liability Average downward adjustment
2 years Lifetime 92%
3 years 92%
4 years 92%
Optional cover Approx. cost
Stop-Loss Limit +0.1% to +30%
High-Cost Claim Cover +0.1% to +30%

Under the PDP plan, an AE can choose a CMP of either 1 or 2-years. In return, the AE receives a downwards adjustment on the standard employer levy that ACC would usually charge. The average downward adjustment is a decrease of 50% for a 1-year CMP and 58% for a 2-year CMP.

At the end of the CMP, the responsibility for all claims, regardless of status, is handed back to ACC, and the AE has no further liability for those claims. However, the physical file is passed back to ACC if only the claim is still active at this stage.

Around 30% of AEs are currently in the PDP plan, split evenly between the 1 and 2-year CMP options.

What is the proposed change?

It is proposed to add options for a 3 and 4-year CMP. In return for AEs taking on a longer CMP, a larger downwards adjustment of the levy would be given. The proposed changes are illustrated in the table below.

Partnership Discount Plan (PDP)

Claim Management Period (CMP) Liability Average downward adjustment
1 year Limited to CMP 50%
2 years 58%
3 years (new) 63%
4 years (new) 66%

It is also proposed to adjust the current claims hand-back process so AEs have to return all claim files to ACC at the end of their CMP.

Why is the change proposed?

These pricing changes will align the CMP options for the PDP plan with the options available for the FSC plan. Aligning these options will allow AEs more flexibility to choose a CMP that best fits their situation.

It is proposed that AEs return all claim files at the end of their CMP to give ACC greater oversight of claims history, and so that ACC does not need to request any claims files later if there is a reactivation. It also ensures that claim files are being stored securely according to ACC’s privacy policy.

What options were considered?

The options considered when developing this proposal included retaining the status quo and the proposed change to add the 3 and 4 year CMP options (along with the requirement for all claim files to be handed back to ACC at the end of CMP). How these options were weighed up is outlined below.

Option one: Status quo

Currently there is a discrepancy between the range of claims management period options available under the FSC plan and the PDP. There is no particular rationale for this difference.

Option two: align the PDP discount with FSC

This option is favoured because it would remove the discrepancy between the FSC and PDP plans, giving those on the PDP plan more flexibility to choose a CMP that best fits their situation. In addition, requiring all files to be handed back at the end of the CMP would streamline the claims hand-back process for both AEs and ACC and should reduce the risk of files not being able to be found at a later date.

What will this mean for Accredited Employers?

For existing AEs (on the PDP plan or the FSC plan and looking to switch), there will be new 3 and 4-year CMP options available. There is no change proposed to what happens (liability wise) at the end of the CMP – i.e. the responsibility for the management of all claims is transferred to ACC and AEs have no further liability.

There will be no impact on workers.

Tell us what you think

General feedback

  1. Do you support the proposed changes to the Partnership Discount Plan? Why/why not?
  2. If you don’t support these changes, what alternatives do you propose?