Understanding Pet Insurance
By Katie Wilson
What if tomorrow your beloved, furry family member required emergency surgery or an extended hospital stay? When life-saving treatment has the potential to drain your bank account, what is your financial plan? Over ninety percent of Americans have health insurance, but less than 6% of dogs and 3% of cats are as lucky (“20…Act.”, Burns).
So…what is pet insurance?
Pet insurance is a tool used by pet owners to help pay for up to 90% their pet’s veterinary care. It is not a credit or loan service. In reality, it’s very similar to human pet insurance with some unique and distinct features. Some of the most popular companies include Nationwide, Embrace, Healthy Paws, Petplan, Trupanion, and Pets Best.
I’d love to have 90% of my vet bills payed! How does it work?
The average monthly premium for a young, mixed breed, mid-sized pet is $44 for dogs and $31 for cats. The payment is mainly based on 1) Types of vet care covered, 2) Deductible type and amount, and 3) How much you want reimbursed.
- Most vet insurance companies split their coverage into three categories – Wellness, Accidents, and Illnesses. Accident-only policies are least expensive at around $10 to $18 per month and only reimburses pet-owners for accidents. Examples include being hit by a car, animal bites, ingesting a foreign body, burns, and falling out of a tree. Illness-only plans are less common and are usually tacked onto Accident Plans for a few more dollars a month ($20 to 30 total per month). Examples of covered illnesses include vomiting, diarrhea, seizures, urinary/respiratory/skin/ear infections, and heart/neurologic/endocrine diseases. Some companies also include orthopedic diseases (torn cruciate ligaments, hip replacements, and slipped vertebral disks), advanced cancer diagnostics and treatments (CT, MRI, radiation, and chemotherapy), and alternative medicine (acupuncture, laser and water therapy, and prescription diets) in their Illness and Accident Plans or offer them for an additional $5 to $15 per month. The final plan category is the Wellness Plan. Companies offer these plans as an additional $10 to $15 per month or as an all-inclusive plan in combination with Accident and Illness plans for a total of $37 to $85 per month. Wellness Plans cover annual dentals, routine bloodwork, and sometimes vaccines, spay/neuter surgery, and prescription parasite preventatives. So, an owner can expect to spend as low at $10 a month for accidents only, as high as $100 a month for everything you can “add on”, or $30 to $50 a month on average for a Wellness, Injury, and Accident combination plan. ***All these numbers are based on $250 annual deductible and 90% reimbursement for a young, healthy, mixed breed dog or cat. So, less or more inclusive options are available for all budget types.
- Deductibles are usually $100, $250, or $500 and can be “annual” or “per incident”. “Per incident” deductibles yield slightly less expensive monthly premiums, but they are not financially responsible in the long run since each vet visit is an “indecent”. Should your pet require many follow-up appointments (cancer treatment, re-checking infections), you would have to continually pay your deductible every time you visit a veterinarian, rather than once a year. Hence, it’s important to purchase a plan with annual, rather than per-incident, deductibles. The monthly premium price differences are within $5 to $10 of each other with the $500 deductible yielding the smallest monthly premium and the $100 deductible yielding the most expensive monthly payment.
- When your pet visits the veterinarian, you are still responsible for paying your bill in full. Only two insurance companies offer to pay your veterinarian directly. After submitting a claim, the insurance company sends you a check (it usually only takes between one and seven business days) for whatever percentage you chose for your policy. Most companies offer to reimburse 70%, 80%, or 90% of your bill (after your deductible). The monthly premium price difference is usually within $5 to $10 of each other percentage, with 90% being the most expensive and 70% being the cheapest. A few pet insurances offer coverage in “scheduled benefits” where every illness has an individual capped payout allotted. These plans are most complex and should your pet’s care exceed your limit, you would not be covered for the additional expenses. Hence, it’s best to avoid “scheduled benefits” and go with a plan that offers a flat percentage coverage.
Most insurance companies also offer discounts! The most common discounts are 5-10% off for military personnel, veterans, spayed or neutered animals, animals who have already visited a veterinarian, veterinary staff, clients with multiple enrolled pets, and for paying all your monthly premiums for the year up front.
So it would cost about $530 a year to insure my dog and $370 for my cat. Is it worth it?
Absolutely, especially for cats! Even if you only use it once in a year for an emergency, it would pay for itself. In 2010, the average emergency visit for cats cost between $2,000 and $3,000 and for dogs, the cost was over $700 (Pet…Edition). After you pay your $250 annual deductible, your insurance covers 90% of the remaining bill. After one to seven day, you would receive a check from your insurance company for $405 for your dog and $2025 for your cat. For just this emergency visit, you have saved enough money to nearly break even for your dog’s insurance and have six times over paid for your cat’s insurance. Should you use it a second time in a year, your care would essentially be 90% off.
For cases where your insurance reimbursement causes you to just break even every year, you might say to yourself, “I’m still paying $530 or $370. Besides for emergencies, why do I even have insurance?” Is your monthly budget in a position where you can pay $500 in one lump sum for a vet bill? Or is it easier to pay $30 to $40 per month then have your $500 bill reimbursed within a week? Many veterinary clinics do not offer payment plans and this is one way to give yourself an interest-free payment plan.
What about my exotic pets?
Nationwide is currently the only company that insures exotic pets (pot belly pigs, goats, birds, rodents, sugar gliders, amphibians, and reptiles).
This sounds awesome, but I heard that pet insurance won’t cover genetic or preexisting conditions…
No companies cover pre-existing conditions. However, each company carefully words what they mean by “pre-existing”. One company states that any illness that could have been present within 18 months prior to buying your policy is “pre-existing”, whether or not your veterinarian diagnosed it yet. Some policies say that if your cat had a respiratory infection when it was a kitten and now has another one as an adult, it is “pre-existing” since she had one in her life already. Others say that if your dog tore his left ACL before getting insurance and then tore his right one while his was insured, it is considered “pre-existing”. Only a few companies state very clearly that a “pre-existing condition” is an illness or disease process that was diagnosed by a veterinarian before purchasing insurance or within the waiting period. It is my strong opinion that these companies are the best to choose. A waiting period is a time period between buying your insurance and when it becomes valid. Most waiting periods are a zero to three days for Accident Plans, 14 to 30 days for Illness, and Wellness Plans usually only have a 24 hour wait period.
One controversy with insurance companies is hereditary or congenital diseases. Some companies do not cover any hereditary or congenital diseases (allergies, heart defects, hip dysplasia, stenotic nares, and elongated soft palate) or any illness that would be secondary to them. For example, if a dog with hip dysplasia now has arthritis and needs daily medications, her case will not be covered. Additionally, if a cat with allergies now has a secondary bacterial skin infection, his case would not be covered. Thankfully, about half of insurance companies cover these diseases and their secondary effects.
Wow, there are so many things to keep in mind. How do I choose the best plan for my pet?
Pet insurance is an amazing tool and there are a few amazing companies out there. You can either start researching on your own or ask your veterinarian for direction. Every pet insurance website offers free online quotes to help you choose a plan within your budget. Be sure to thoroughly read each your policy before you purchase anything while keeping in mind the things covered in this article. Should you ever need more help, call the insurance companies directly for clarification on certain rules and policies. Finally, your veterinarian is a wealth of knowledge and they are always happy to help you do the best you can for your pet.