Deep Dive: Understanding Pet Insurance

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Pets are part of our families, and it is so important to know that you’ll be able to afford healthcare for them if they need it. Making sure that you take them in for annual wellness exams can go a long way towards preventing illness, but there is still no way to ever guarantee that your pet won’t have serious medical bills in his/her lifetime. Veterinary medicine today uses the same techniques, technology, and advancements that human medicine uses; therefore, it can cost just as much. Bills for specialty procedures can easily climb into the thousands, if not tens of thousands of dollars. Having pet insurance can make all the difference in being able to afford the health care that your pet may need.

Figuring out which insurer will aid you the most in caring for your animal companion can be a tricky, complicated affair. To help you, we will break down the most basic component costs and savings of a typical insurance plan, and give you some tips on how to discern which insurer you should trust with your pet’s health based on these factors.

These are the three components which we will cover in this article:

Deductibles

Copayments

Premiums

To help explain these and give you a concrete example of how an insurance claim plays out, let’s imagine a hypothetical pet injury. You and your dog Rufus are out throwing a Frisbee and Rufus jumps to catch it. When he lands, something funny happens and he comes back limping and whimpering. You take him to your veterinarian who tells you that Rufus is suffering from osteoarthritis, a common degenerative joint disease that can cause swelling and pain over time. After an array of tests, your veterinarian gives you multiple treatment options which ultimately come out to around $2,000 in the short-term. His long-term needs with regards to the osteoarthritis have yet to be determined.

If you have pet insurance for Rufus, the insurance company is going to reimburse you for a (hopefully) large portion of this bill. The two main factors which determine how much of the $2,000 you get reimbursed for are the deductible and copayment amounts. Let’s look at what each of these mean in the context of Rufus’ injury.

Please note: Almost all pet insurance works on a reimbursement basis—that is, you will be responsible for covering the entirety of your bill upfront, and then insurance will reimburse you once you have filed a claim. There is, however, currently one company which can pay your eligible claim amounts at check-out.

Deductibles: This is the amount of money that you must pay on health care for your pet before your insurance steps in and covers the rest (well, most of the rest, we’ll get to that when we talk about copayments). So, if Rufus’ deductible is $200, you will definitely be responsible for that much of his$2,000 vet bill.

Now, here is where things can get a little complicated. There are different kinds of deductibles, and you’ll want to make sure you know which kind comes with the insurance plan that you are purchasing. Some deductibles are per-year (annual); some are per-lifetime, per-condition; and some are per-year (annual) and per-condition. So, in Rufus’ case, if his $200 deductible is per-year, you’ll have to pay $200 of his osteoarthritis related bills every year that he gets treatment for osteoarthritis. However, if you have a per-lifetime, per-condition deductible, you only have to pay the $200 for this appointment (or until the deductible is satisfied) and then you will never have to pay another deductible for this condition. Given the size of this bill, Rufus’ $200 deductible will have already been met for all future osteoarthritis appointments and you will simply get reimbursed for the entire appointment minus your copay % (we’ll get to this in a second).

If your insurer has a per-year (annual) and per-condition deductible, then you will have to satisfy Rufus’ $200 per yearly deductible plus $200 each year his condition is treated before the insurance company will start paying. In this last case that will total $400 per year.

One last thing on deductibles: It is important to understand that “per condition” means that each condition has its own deductible. This means that you are responsible to meet your deductible each time your pet comes in for a new injury or illness. So, in the unfortunate event that Rufus sustains another injury—say an infected Foxtail—you will again have to pay $200 of the bill before health insurance covers the rest because this is a different condition than osteoarthritis.

Once your deductible has been met, the only remaining amount of Rufus’ care that you are responsible for is you copayment percentage.

Copayment: This is a percentage of the health care bill which you are responsible to pay after you have subtracted your deductible. Good plans will often have something around a 10% copayment, which means that the insurance company covers 90% of the costs after you’ve met your deductible. For Rufus, you’ve already paid $200 out of the total $2,000 to meet your deductible, which leaves $1,800 left. If your copayment is 10%, you will be responsible for $180 of the remaining $1800. So, in total, you are responsible for $380 of the bill, meaning that your insurance will be sending you a check for $1,620—not bad considering you’d have had to pay the entire $2,000 without insurance.

Premium: Finally, your premium is simply the monthly amount of money that you pay to have health insurance for your pet. Think of it like your pet’s monthly subscription fee for insurance. You can also think of it in the same way that you would your home/apartment and auto insurance premiums. A number of factors go into determining premiums, and companies will often take into account things like breed, age, gender, whether the pet has been spayed or neutered and where you live. After considering these factors, companies will offer a few different price options for your premium. Generally, the more you pay per month, the lower your deductible will be.

Hopefully this has provided you with a good overall picture of how veterinary health insurance works. Remember—and we really can’t stress this enough—pet insurance will NOT cover costs associated with pre-existing injuries or illnesses. This means that if you wait until Rufus has his bad jump to purchase insurance, you are going to have to cover that $2,000 entirely on your own. In other words, don’t wait until they have a problem. Pet Insurance is worth it right now, and you’ll be glad you got it.