Arizona Workers’ Compensation Insurance

‍

All Arizona businesses with one or more employees are required to carry workers’ comp—an insurance policy that compensates employees for work-related injuries and illnesses. This insurance covers things like medical costs, lost wages, and death benefits.

‍

Let’s dive into everything you need to know about Arizona workers’ comp. 

Arizona Workers’ Compensation Law

The Industrial Commission of Arizona (ICA) requires all businesses with one or more employees, whether they are employed full-time or part-time, to carry workers’ comp insurance coverage. 

‍

Coverage is not required for:

‍

• Independent contractors
• Subcontractors
• Casual or occasional workers
• Domestic workers
• Sole proprietors with no employees

‍

An employee may choose to reject coverage by filling out the Employee’s Notice of Rejection of Terms of the Arizona Workers’ Compensation Law form. The employee must fill this form out twice and give one copy to their employer, who files a copy with their insurance provider.

How Does Workers’ Comp Work in Arizona?

In Arizona, comp benefits provide employees with 66% of their average monthly wage if they get sick or injured on the job, up to a maximum of $5,393.37 a month in 2023. The insurance also pays for their medical bills so they can recover. 

‍

Here’s a full list of what workers’ comp can cover in the state:

‍

• Medical expenses: Cost of all medical treatments needed for the injury, including rehabilitation costs.
• Lost wages: 66% of the employee’s average monthly wage up to the state max.
• Disability benefits*: If a workplace injury affects an employee’s earning capacity, they may receive benefits for temporary or permanent impairment.
• Death benefits: Burial expenses up to $5,000, plus 66% or two-thirds of the employee’s average monthly wage up to the state max, paid to dependents if an employee is killed on the job

‍

*Disability benefits fall into four categories, which help determine how long an employee will receive benefits–and how much they’ll get:

‍

• Temporary partial disability: An injury that affects an employee’s ability to work but only lasts for a limited time
• Temporary total disability: An injury that prevents an employee from working at all until they recover
• Permanent partial disability: An injury that affects an employee’s ability to work and lasts for the rest of their life
• Permanent total disability: An injury that prevents an employee from working at all for the rest of their life

‍

Arizona uses a “no-fault” system, which means that, in most cases, it doesn’t matter who or what was the cause of the accident. The worker is still entitled to medical benefits and other compensation.

How to Purchase Workers’ Compensation Insurance

There are three options for getting workers’ comp in Arizona:

‍

• Purchase from a private insurance company: As a business owner, you probably already have an insurance agent you work with for things like liability and business owners insurance. Your agent should also be able to help you purchase comp coverage. 
• Purchase from Arizona’s state fund: The State Compensation Fund (SCF) of Arizona offers policies to all businesses in the state who can pay their premiums and haven’t been convicted of insurance fraud.‍
• Become self-insured: If you have an annual payroll of at least $2 million, you can apply to the ICA to become self-insured. This means you’ll pay claims directly from internal funding, rather than through a third-party insurer.

‍

Purchasing from a private insurance agent is usually the easiest and most affordable option. 

‍

If you purchase through a private insurer, you can use Hourly to make the process even more convenient and low-cost. Hourly’s easy-to-use platform eliminates guesswork by paying your workers’ comp premiums based on real-time payroll numbers, rather than estimates. 

What Do I Do If I Have an Injured Employee?

If you have an injured employee, and their injury happened at work or was caused by their work, you should report the injury to your workers’ compensation insurance carrier and the Industrial Commission of Arizona (ICA). 

‍

As an employer, you are required to file an Employer’s Report of Injury Form within 10 days of when you first learn about the accident. You’ll need to provide your policy number, along with other detailed information about the injury.

‍

But it’s the injured worker’s responsibility to file the actual claim, which they must do within a year from the date of the injury (or from the date on which they became aware of the injury). They can do this by filing a Worker’s and Physician’s Report of Injury Form with both the claims division of the ICA and your insurance carrier.

‍

If an employee becomes ill because of their work, the same time limits apply, but instead of the date of injury, they start from the date on which the employee first began experiencing symptoms.

‍

If you need help filing a claim, you can contact the ICA’s Claims Division. If you need help with a workers’ comp dispute, you can contact the ICA’s Administrative Law Judge Division (ALJ).

FAQs about Arizona Workers’ Compensation Insurance

How much does workers’ comp pay in Arizona?

Currently, the maximum amount you can get on workers’ comp is $5,393.37 per month for employees on temporary or permanent disability. The maximum changes every year to reflect the state’s current income averages. 

‍

You can find the most recent number on the Industrial Commission of Arizona’s website. Workers’ compensation payouts vary greatly depending on the circumstances of the injury and other factors. 

How long do you have to report a workers’ compensation claim in Arizona?

Employers must report a workers’ comp claim within 10 days of when they first learn about the accident. An employee must file a Worker’s Report of Injury Form within one year of the date of injury or date of first symptoms.

How long can you stay on workers’ comp in Arizona?

If an employee’s injury or illness is serious enough, they could potentially receive workers’ compensation benefits for the rest of their life. In most cases, there’s no time limit to when benefits will end. The only exception is if a worker decides to settle their case.

What is a workers’ comp settlement in Arizona?

When an employee settles a claim, they accept a lump sum payment as compensation for their injuries, illness, and/or lost wages. After a settlement, the case becomes closed and the employee cannot reopen it later on. That’s why it’s best to seek legal advice before settling a case.

What are the penalties for not carrying workers’ comp in Arizona?

Not carrying workers’ comp in Arizona is a class 6 Felony, and you can be charged between $1,000 and $10,000. If one of your employees files a claim and you don’t have coverage, the ICA will pay for the worker’s benefits out of their Special Fund Division, then bill you for the total amount, plus a penalty of either 10% or $1,000, whichever is higher. 

Protect Your Employees and Your Bottom Line with Hourly

With good coverage, you’ll protect your business’s bottom line and ensure your employees’ medical care is covered if they get sick or hurt on the job. 

‍

If you don’t have a workers’ comp policy, call your insurance agent or broker to find out about the best policy for your needs—and ask them about getting started with Hourly. 

‍

From Phoenix to Tucson, Hourly makes workers’ comp convenient and affordable for Arizona small businesses just like yours.