California workers’ compensation benefits increase almost every year. This is primarily driven by statewide cost-of-living changes and wage growth. These are referred to as COLA increases, and they help ensure injured workers don’t fall behind others just because of their job-related injuries. In 2027, another increase is expected, and knowing how it works can be helpful in your workers’ comp case.
At Ratto Law Firm, P.C., our California workers’ compensation attorneys are here to help. We help you with COLA adjustments, claim denials, and other aspects of your CA workers’ comp case.
Why Workers’ Comp Benefits Increase Annually
California ties several workers’ compensation benefits to the State Average Weekly Wage (SAWW). When the SAWW rises, certain benefits automatically increase. This system ensures disability payments keep pace with rising wages and inflation.
The SAWW is calculated each year based on statewide payroll data. When average wages increase, the SAWW goes up, and workers’ comp benefits follow.
Which Workers’ Comp Benefits Are Affected by the 2027 COLA?
Not all workers’ comp benefits adjust annually. The 2027 COLA will affect specific categories tied to the SAWW.
Temporary Total Disability (TTD)
TTD benefits, paid when an injured worker cannot perform their job, are calculated at two‑thirds of the worker’s average weekly wages, subject to statewide minimums and maximums. When the SAWW increases, the maximum TTD rate increases as well.
This means:
- Higher‑earning workers may receive larger weekly payments
- Workers already below the maximum may not see a change
- Injuries occurring in SAWW‑indexed years may receive automatic upward adjustments
Permanent Total Disability (PTD)
PTD benefits also adjust annually based on the SAWW. Workers receiving long‑term disability payments may see their weekly rate increase beginning in 2027.
Life Pension Benefits
For certain high permanent disability ratings, injured workers may qualify for a life pension. These payments are also tied to the SAWW and increase each year.
Supplemental Job Displacement Benefits (SJDB)
While the voucher amount itself does not change, the Return‑to‑Work Supplement Program, a separate $5,000 payment, may be indirectly affected by statewide wage trends and policy updates. Any changes for 2027 will be announced by the Department of Industrial Relations.
How the 2027 COLA Is Calculated
The 2027 increase will be based on the percentage change in the SAWW from 2025 to 2026. The Division of Workers’ Compensation typically releases the official percentage in late fall or early winter.
Once the percentage is announced:
- The new maximum and minimum TTD rates are published
- Adjusters update benefit calculations
- Injured workers receiving ongoing payments may see increases beginning January 1, 2027
For injuries occurring in years eligible for SAWW‑based increases, the adjustment is automatic. For other injuries, the rate remains fixed.
What Injured Workers Should Expect in 2027
Because California wages have continued to rise, injured workers can expect:
- A higher maximum TTD rate
- Increased PTD and life pension payments
- Adjustments for eligible older injuries still receiving benefits
- Updated benefit notices from insurance carriers
Workers earning close to or above the statewide average wage will see the biggest impact. Those earning lower wages may not see a change unless their injury year qualifies for SAWW indexing.
Why These Annual Increases Matter
Cost‑of‑living adjustments play a critical role in protecting injured workers. Without them, disability payments would fall behind rising housing costs, medical expenses, and everyday living expenses. This is especially true in high‑cost regions like Los Angeles, the Bay Area, and coastal counties.
Annual increases help ensure:
- Wage replacement stays meaningful
- Long‑term disability recipients maintain financial stability
- Workers are not penalized by inflation during recovery
- Benefits remain aligned with California’s economic conditions
For workers recovering from serious injuries, even modest increases can make a noticeable difference.
What Employers and Insurers Should Prepare For
Employers and claims administrators should anticipate:
- Updated benefit calculations
- Revised notices and documentation
- Potential increases in claim costs
- Adjustments to reserves for long‑term disability cases
Accurate implementation is essential, as miscalculations can lead to penalties, disputes, and delayed payments.
Learn More About COLA Adjustments in California Workers’ Compensation Cases
If you need help with your benefits, a claim denial, or anything else related to a workers’ comp claim in California, we are ready to help.
Our team at Ratto Law Firm, P.C. provides you with the advice and representation you need. Contact us today for a consultation.