If you have been hurt on the job and cannot work, Arizona workers’ compensation will replace some of your lost wages. You can receive lost wage replacement benefits through any of the following:
- Temporary Total Disability (TTD). These are benefits workers’ compensation pays when you cannot work at all during your recovery.
- Temporary Partial Disability (TPD). You can receive these benefits when you can work part-time or with reduced earnings while you are recovering.
- Permanent Partial Disability (PPD). These are benefits you can receive if you suffer a lasting impairment that reduces your earning capacity even after you have reached maximum medical improvement (MMI).
- Permanent Total Disability (PTD). These benefits cover permanent work incapacity.
Generally, workers’ compensation will pay 66 2/3% of your pre-injury earnings after a seven-day waiting period, up to a statutory maximum monthly payment amount. At the same time, you cannot earn your full income because of a work-related injury or illness.
Your workers’ compensation wage loss benefits are distinct from medical benefits, which workers’ compensation covers immediately after your work injury without any waiting period.
At Matt Fendon Law Group, our firm’s focus is strictly on Arizona workers’ compensation claims, including wage loss replacement benefits. Together, our highly experienced workers’ compensation attorneys have many years of combined experience representing Arizona workers with initial claims and appeals of denied claims.
We will work with you to determine the exact type of wage-replacement benefits you can receive, estimate how much you can anticipate receiving in wage-loss compensation, and represent you when you file your workers’ compensation claim.
To get started, call us at (800) 229-3880 or contact us online for a free consultation.
How Much Does Workers’ Compensation Pay for Lost Wages?
Below, we cover the four kinds of wage replacement benefits you can receive through Arizona workers’ compensation, depending on your circumstances.
Temporary Total Disability (TTD) Benefits
TTD benefits pay 66 2/3% of your average monthly wage (AMW) when you are completely unable to work because of a job-related injury or illness. Although Arizona law does not require a specific payment interval, carriers typically issue payments every two weeks.
Statutory Cap on Temporary Wage Replacement Benefits
The amount of wage replacement benefits you can receive is subject to a maximum monthly wage amount set under Arizona law (Arizona Revised Statutes Section 23-1041(E)).
The Industrial Commission of Arizona updates this maximum every year based on the Bureau of Labor Statistics’ Employment Cost Index. For injuries that happen on or after January 1, 2026, the state maximum average monthly wage recognized for benefit calculation is $6,131.
Temporary Partial Disability (TPD) Benefits
When you can return to work, but in a limited or light-duty capacity, and your earnings are reduced as a result, then TPD benefits will pay 66 2/3% of the difference between your pre-injury wages and what you are currently earning during your partial disability period.
So, for example, if you normally earned $4,500 per month but now earn $2,500 per month doing part-time or modified work while recovering, then your wage loss benefit would be approximately two-thirds of the $2,000 difference, which comes to about $1,333 per month.
As with TTD, the Arizona maximum wage limit applies to TPD calculations. If your pre-injury wages were above this cap, then your benefit is based on the capped amount. TPD benefits generally continue until you return to your full earning capacity or reach maximum medical improvement, whichever comes first.
7-Day Waiting Period for Wage Benefits
Arizona law requires a 7-day consecutive waiting period before you can receive wage-loss compensation. If your disability keeps you from working more than these seven days, then your wage replacement payments begin on the eighth day of lost time.
However, if you remain unable to work for at least 14 consecutive days, then you will retroactively receive benefits for the first seven days.
Note that this seven-day waiting period only applies to wage benefits. It does not affect your ability to receive medical compensation benefits.
Permanent Partial Disability (PPD) Awards
If, after you reach your point of maximum medical improvement, you are permanently medically impaired, then you may qualify for PPD benefits. These benefits compensate you for lost earning capacity, based on whether your injury is “scheduled” or “unscheduled” in nature.
Scheduled PPD Benefits
Scheduled PPD compensates you for injuries to specific body parts and injuries set forth by Arizona statutory law, like the loss of a finger, hand, arm, foot, or eye.
For these injuries, Scheduled PPD is paid at 55% of your average monthly wage for a complete loss or amputation, or 50% of your average monthly wage for a partial loss of use, for a fixed number of months set by statute. The number of months depends on which body part was injured.
For instance, complete loss of use of a major arm is compensated for 60 months, while complete loss of use of a minor arm is compensated for 50 months — both at 55% of your pre-injury average monthly wage.
Unscheduled PPD Benefits
If your injury is not included in the statutory schedule, it is considered an unscheduled injury. For unscheduled injuries, PPD benefits are 55% of the difference between your pre-injury average monthly wage and the reduced monthly earning capacity you’re left with after your injury.
The ICA will determine how much less you can earn because of your permanent disability, considering factors like your injury’s impact, your medical restrictions, your education and skills, work history, and age.
Two key features of PPD benefits are that there is no seven-day waiting period, as with temporary disability benefits, and that, unlike scheduled disability benefits, your wage replacement benefits are based on your reduced earning capacity rather than a fixed statutory period.
Permanent Total Disability Benefits (PTD)
PTD wage benefits apply if you cannot work at all permanently. It pays 66 2/3% of your pre-injury average monthly wage as long as you remain disabled, which is usually for the duration of your life, subject to Arizona’s statutory maximum wage limit.
What is Your Average Monthly Wage?
As we have seen above, your average monthly wage is an important factor in determining how much you can receive in workers’ compensation wage-replacement benefits.
- If you had steady earnings in the 30 days before your injury, then that amount is usually the basis for calculating what your average monthly wage is.
- If you were working under a guaranteed pay contract on a daily or monthly basis, then your average monthly wage is based on the contract’s guaranteed pay rate.
- If you were employed for less than 30 days, or if your income was irregular (for example, you work variable hours, or are engaged in seasonal work, or you were a recent hire), then Arizona law has other methods to calculate your average monthly wage, like considering the wages of other workers in the same industry and area as you.
Once the insurance carrier accepts your workers’ compensation claim, it will calculate your average monthly wage, subject to review and finalization by the Industrial Commission of Arizona (the ICA). This review usually takes about 30 days to complete.
Workers’ Compensation Wage Benefits Are Tax-Free
One important advantage of Arizona TTD, TPD, or PPD wage-replacement benefits is that they are generally not taxable for federal or Arizona state tax purposes.
This tax-free status holds as long as you are receiving only workers’ compensation benefits; if you are also receiving other disability benefits, such as Social Security, some of your income may be taxable.
Do You Have a Claim For Arizona Workers’ Compensation Lost Wages?
Workers’ compensation wage benefits will not completely replace your lost income because of a work injury or illness. Still, they can make a difference for you when you cannot work temporarily or if your income-earning ability is reduced permanently.
Note that Arizona workers’ compensation does not cover pain and suffering. Those kinds of damages are only available if you have a separate third-party personal injury claim arising out of the same incident — for example, if a non-employer party caused your injury.
An experienced workers’ compensation attorney can review your situation to determine whether you may have a third-party claim in addition to your workers’ compensation benefits.
Knowing which Arizona workers’ compensation wage replacement benefits may apply to your circumstances is something that an experienced workers’ compensation attorney at Matt Fendon Law Group can help you with.
To learn more about our services and speak with an experienced Arizona workers’ compensation lawyer in a free consultation, call us at (800) 229-3880 or use our online contact form to reach one of our workers’ compensation attorneys, who will promptly get back to you.
