A Guide to How to Calculate Arizona Workers’ Comp Wage Loss Benefits
Were you hurt on the job in Arizona? A serious workplace injury or illness can put a serious financial strain on your family—especially so if you are forced to miss a significant amount of time for your medical care and need to file a workers compensation claim. Wage loss benefits are designed to help relieve some of the burden. This raises an important question: How are workers’ comp wage loss benefits calculated?
The short answer is that Arizona considers an applicant’s pre-injury average monthly wage. This is governed by the average monthly wage statute, which outlines the legal framework for calculating and adjusting the average monthly wage for injured workers. Your benefits are typically paid at a rate of two-thirds of this wage—subject to state-mandated minimum and maximum benefits. Here, our Phoenix work injury attorneys provide a comprehensive guide to how to calculate workers’ comp wage loss benefits in Arizona.
Background: What are Workers’ Comp Wage Loss Benefits?
Simply defined, workers’ comp wage loss benefits—sometimes referred to simply as temporary total disability or TTD—are financial payments provided to employees who are forced to miss time and work (and paychecks) due to a work-related injury or illness. The benefits are designed to partially replace the income lost while the employee is unable to work. In addition to wage loss benefits, injured workers may also be entitled to permanent disability benefits if their injury results in long-term impairment. The amount of compensation typically depends on the employee’s average earnings before the injury.
Amendments to the average monthly wage statute impact compensation benefits for injuries occurring on or after January 1, 2010, by ensuring that the average monthly wage is correctly set based on the time of the industrial injury.
Note: Wage loss benefits are just one type of workers’ comp benefit in Arizona. Following an injury on the job in Phoenix, Tucson, or elsewhere in the region, you may also be entitled for other types of benefits, including for all reasonable and necessary medical care.
An Overview of How Arizona Calculates Workers’ Comp Wage Loss Benefits
In Arizona, workers’ comp wage loss benefits are calculated based on the injured worker’s average monthly wage prior to the injury. The workers compensation insurance carrier plays a crucial role in recommending the average monthly wage to the Industrial Commission, which ultimately sets the official wage. It is this figure that serves as a benchmark to determine the compensation that an injured worker is entitled to receive. The maximum average monthly wage is adjusted based on an annual percentage increase tied to the Employment Cost Index, as directed by the Industrial Commission. For the most part, workers’ compensation in Arizona provides workers with wage replacement benefits paid at a rate of two-thirds of their average monthly wage. The calculation aims to provide financial stability by partially replacing the income lost due to the inability to work.
Know How Your Average Monthly Wage is Determined
Your average monthly wage is a crucial factor in determining your workers’ compensation benefits in Arizona. It is calculated by reviewing your earnings over a specific period prior to your injury, including wages, overtime, and bonuses. For some workers, it is a relatively straightforward calculation. If you make the same amount of money—and work the same number of hours each month—there is relatively much debate over your proper average monthly wage. If an injured worker is placed on light duty by their physician, this can also impact the calculation of their average monthly wage. However, for other workers in Arizona, it can be a more complicated calculation. Notably, factors such as seasonal work or irregular hours can be issues. Additionally, courts have allowed for the inclusion of income from concurrent employment, ensuring that all earnings are considered in determining the AMW, thereby maximizing the benefits an injured worker can receive.
If you believe that your average monthly wage has been miscalculated by the insurance company—and thus you believe that you are being underpaid on your workers’ comp benefits—you have the right to dispute the figure. A top-rated Arizona workers’ comp attorney can help you appeal. In some cases, an expanded wage base that takes into account a longer period of earnings may be used to more accurately reflect the worker’s pre-injury earning capacity.
The presumptive wage base typically uses earnings from the 30 days preceding the injury, but this period can be adjusted if it does not accurately reflect the worker’s earning capacity. Accurate wage calculations are essential for proper compensation.
State Maximum and Minimum Workers’ Comp Benefits in Arizona
Not all workers are paid wage loss benefits at two thirds of the rate of their average monthly wage. As explained by the Industrial Commission of Arizona (AZICA), there is a statutory maximum weekly workers’ compensation wage loss benefits. There is also a state-mandated minimum workers’ compensation benefit. In other words, the law sets the absolute highest and absolute lowest amount that an injured worker can be paid in wage loss benefits through the Arizona workers’ compensation system—regardless of their rate of pay. Here is an overview for 2024:
The maximum average monthly wage is indexed based on an economic measure derived from data relevant to the prior calendar year.
- Maximum Wage Loss Workers’ Comp Benefit in Arizona: The maximum workers’ comp benefit in Arizona for 2024 is capped at $5,663.04 per month. The cap is set at 100 percent of the state average monthly wage, updated yearly based on economic assessments.
- Minimum Wage Loss Workers’ Comp Benefit in Arizona: The minimum benefit level for 2024 is set at $250 per month. If you are entitled to workers’ comp wage loss benefits in our state, you must be paid at least this amount regardless of your actual wage level.
Are Arizona Workers’ Comp Wage Loss Benefits Taxed?
No. In the vast majority of cases, no taxes need to be paid on workers’ comp wage loss benefits in Arizona. This is true at both the state level and the federal level. The Internal Revenue Service (IRS) is clear: Workers’ comp wage loss benefits are tax-free. One reason that workers’ comp benefits are paid at only two-thirds of an employee’s pre-injury average monthly wage is that they are adjusted for taxes that would have otherwise been due.
How Many Days Do You Have to Miss Before You Can Get Benefits for Lost Wages?
Did you miss a single day on the job because of a work injury in Arizona? Unfortunately, you are not eligible for workers’ comp wage loss benefits. In Arizona, to qualify for Workers’ Comp benefits for lost wages, an injured worker must miss at least seven consecutive days of work due to their injury. Further, benefits for these initial seven days are only payable if the worker continues to be incapacitated for a total of 14 consecutive days. After this period, compensation begins on the eighth day of absence from work. If you have any specific questions or concerns about whether you are eligible to receive workers’ comp wage loss benefits, a top-tier attorney can help.
Learn More About Industrial Commission of Arizona Average Monthly Wage with Our Firm
At Snow, Carpio and Weekley, PLC, our Phoenix workers’ compensation attorneys are always ready to go above and beyond to do right by our clients. If you have any specific questions or concerns about calculating workers’ comp wage loss benefits, we are here as a legal resource that you can count on. Hiring an experienced workers compensation attorney is crucial to navigate the complexities of workers’ comp claims and ensure your rights are protected. Call us at (877) 370-5788 or contact us online to arrange your free case review. We represent injured workers in Phoenix, Tucson, Lake Havasu, and throughout Arizona.
