If you run a business that has employees, you’ll need to purchase Arizona workers’ compensation insurance. In fact, this type of insurance, which helps pay your employee’s medical bills if they get injured on the job and limits your liability for workplace accidents, is a requirement in most states, including Arizona, with some exceptions.
Business owners in Arizona typically pay $0.88 for every $100 of covered payroll. For example, a business with a total annual payroll of $100,000 will pay roughly $880 for workers’ compensation insurance annually. Or about $73 a month. But a number of factors, such as your trade, types and number of employees, location, and claims history, can raise or lower your rates.
If an employee sustains an injury on the job or becomes ill because of their job, workers’ compensation will help pay for their medical bills. In Arizona, workers’ compensation covers:
- Accidents and injuries – If your employee is injured in an accident at work, and they require the services of a hospital or a doctor’s office, workers’ compensation will cover their medical bills.
- Illness – If an employee becomes sick from exposure to allergens or other hazardous materials, they can claim workers’ comp benefits.
- Repetitive injury – It’s not always a one-time incident that causes injury: performing the same movements over and over can cause injuries over time – and these repetitive injuries are also covered by workers’ comp.
- Ongoing care – If your employee has ongoing medical needs as a direct result of their accident or illness, including the need for additional doctor’s appointments or surgeries, they can get coverage from workers’ comp.
- Disability – If an injury or illness causes your employee to become temporarily or permanently disabled, they will be eligible for workers’ compensation benefits. Generally, the employee can receive payments for a permanent or partial disability weekly or as a lump sum.
The specific type of benefits paid to your injured employees can include:
- Temporary total disability – Also known as TTD payments, these benefits compensate for lost wages if your employee cannot work at all during their recovery.
- Temporary partial disability – If your employee can return to work but has limitations such as needing to work fewer hours or can only do “light” duty, they will get TPD payments. If their doctor places restrictions on the kind of work they may perform or if your company does not offer full-time work that complies with those restrictions, they might still be qualified.
- Permanent total disability – Permanent disability benefits will be granted if an injury is determined to be permanent. In general, a disability is permanent if the issue persists after the patient has made a full recovery otherwise. Employees who are unable to work due to an illness or accident at work are eligible for PTD benefits.
- Permanent partial disability – An injured worker may be eligible for permanent disability benefits if their disabilities are determined to be permanent, even after they have recovered to their full medical potential. A worker receives Permanent partial disability (PPD) benefits when they have physical impairments that are not completely disabling but are permanent.
Arizona’s Workers’ Compensation Death Benefits
Workers’ compensation insurance also pays out death benefits to the qualifying family members of an employee who passes away as a result of a work-related illness or injury. According to Arizona state law, the employee’s family will receive funeral expenses up to $5,000, as well as death benefits payments.
If there is a surviving spouse and no children, the spouse will receive a portion (66 and ⅔%) of the deceased’s average monthly wage. The surviving spouse will continue to receive these payments until they pass away or remarry. If they remarry, they will receive 2 years’ worth of payments in one lump sum after the marriage.
If there are children and a surviving spouse, the surviving spouse will receive a smaller portion (35%) of the deceased’s average monthly wage. As above, they will receive this until they pass away or remarry. The children will also receive a portion (31 and ⅔%) of the deceased’s wages. Which is evenly split among them. They will get these payments until they:
- Turn 18
- Turn 22 if they are in college, trade school, or other accredited higher education
If they are over 18 but unable to support themselves, they will continue to receive payments.
Additionally, if there is no surviving spouse or children, parents, grandkids, or siblings who were dependent on the worker may qualify for payments.
Arizona requires workers’ compensation coverage for both full-time and part-time employees. Certain employees, however, do not need workers’ compensation coverage, including:
- Independent contractors
- Casual employees whose work is not essential to the normal operation of your company
- Domestic workers who work in private homes
Business owners who are self-employed and partners with no employees are also exempt from having workers’ compensation. But they can choose to have it if they want peace of mind. Your business’s corporate officers may also require workers’ compensation coverage.
Arizona’s Workers’ Compensation Laws
Workers’ compensation in Arizona works on a “no fault” system. This means that injured workers are always entitled to medical care and compensation. Regardless of who or what was the cause of their workplace accident.
Industrial Commission of Arizona (ICA) handle workers’ compensation claims. The ICA was founded in 1925 and is has two divisions: the Claims Division and the Administrative Law Judge (ALJ) Division.
The Claims Division is responsible for:
- Supervising insurance companies that handle claims from injured workers
- Ensuring that workers receive the appropriate benefits under Arizona Workers’ Compensation Law
The claims division staff is available for general assistance only, not legal advice. They will be able to answer any questions you have about workers’ compensation regulations.
When the Claims Division receives a request for a hearing, they transfer the case to the ALJ’s Hearing Division. The ALJ division handles claims disputes, employer disputes, and insurance carrier disputes. Disputes that they might handle can include:
- Continuing benefits
- Supportive care
- Reopening of claims
- Loss of earning capacity
How to Buy Workers’ Compensation Insurance
There are a few ways you, as a business owner, can buy workers’ comp coverage:
- Through a recognized workers’ compensation insurer – Private insurers are governed by state law, but they are free to accept or reject any client and set their own premiums. A private carrier may offer lower-cost policies with better customer service than a government-sponsored program.
- State fund – The Arizona State Compensation Fund (SCF) provides workers’ compensation coverage and services to Arizona businesses and their employees.
- Individual self-insurance – If you qualify, you can assume the financial risk of offering benefits to your employees. In short, you would pay the cost of each claim out-of-pocket as it arises. Rather than paying a predetermined premium to an insurance company or a state-sponsored Workers’ Compensation fund. An employer seeking self-insured workers’ compensation authority must apply to the ICA’s Self-Insurance Office. The minimum requirements for self-insurance authority are an annual payroll of at least $2,000,000, total assets of at least $50,000,000 (or a cash flow ratio of at least 0.25), and at least 5 years of operation in Arizona.
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How to Get the Most Savings
There are a few ways to make sure you’re getting the best rates for your workers’ compensation insurance. First of all, it’s important to correctly classify your employees when purchasing your policy. For example, employees with desk jobs or other low-risk occupations will cost less to insure. You can also avoid misclassification fines by making sure you’re getting this right.
Next, if you’re a small business, you can look into the option of purchasing pay-as-you-go workers’ compensation. The upfront cost of this kind of workers’ compensation insurance is low. And you can base your payments on your actual payroll rather than an estimated one. Businesses who recruit seasonal staff or have shifting employee counts can benefit from this type of arrangement.
Finally, a formalized safety program can aid in reducing workers’ compensation expenses. Safer workplaces have fewer accidents, which helps keep your insurance costs low.
Arizona Worker’ Compensation FAQS
Are you required to have workers’ compensation insurance in Arizona?
Yes, if you have employees, you have to have workers’ compensation insurance in Arizona. You could face severe penalties if you do not have the proper insurance.
If your employee files a claim with the ICA and does not have coverage under an active policy at your company, the ICA’s Special Fund Division will pay the benefits. It would then charge you for reimbursement of those benefits paid, plus a penalty of 10% of any benefits paid or $1,000, whichever is greater.
You may also face a $1,000 fine just for not having the proper insurance, as well as additional fines of $5,000 and, eventually, $10,000.
How do workers’ compensation settlements work in Arizona?
Claims in Arizona are based on a no-fault system. If the eligibility conditions are met, an injured employee will receive medical benefits and compensation regardless of the cause of the work-related accident.
The employee must file their claim within a certain time frame. You, as the employer, have to submit an Employer’s Report of Injury form within 10 days of receiving notification of an accident. So, to receive their workers’ compensation benefits, the employee must submit a Worker’s Report and Physician’s Report of Injury form within a year of the date of the injury. Generally, these forms are submitted by their doctor’s office.
What is the statute of limitations in Arizona?
Workers have one year from the date of injury to file a claim. When an injury occurs on the job, workers must notify their employer as soon as possible. After receiving the claim notice, the employer’s insurance company has 21 days to accept or deny it.
If an insurance company denies a claim, the injured employee must request a hearing within 90 days of receiving the denial notice.
The ICA’s Claims Division does not provide legal advice. So, you should consult with a workers’ compensation attorney if you have a dispute about a claim or a settlement.
Why Use EZ
If you’re looking for workers’ compensation insurance for your business, come to EZ. We pride ourselves on giving each and every one of our customers individualized attention. And we strive to create a supportive environment while you shop. In addition to offering personalized service, we also provide instant (and free!) quotes from an agent chosen based on your needs. An agent who you will get to know as soon as you submit your form. And who really knows their stuff. That is what sets us apart from the competition. Obviously, we want to ensure that you make an informed choice and get the best deal possible for your money. There are no hassles and no obligations – and our services are always free!
If you still have questions, feel free to give us a call at 877-670-3538. You will connect with a local insurance agent who can answer all of your questions, and help you find the workers’ compensation policy that works best for your business.