Health Insurance: Pros And Cons

Karen Doc Halligan, DVM

You consider your cat or dog a member of your family, but unfortunately your pet isn’t covered by your family’s health plan. The sad truth is that the cost of veterinary care for your four-legged family member can amount to hundreds, if not thousands, of dollars over your pet’s lifetime. Most people wouldn’t dream of going without insurance for themselves and their families, but what happens when a beloved pet suddenly gets ill or has some kind of accident?

When people think of animals unnecessarily being “put to sleep,” most of us envision the millions of victims of the pet overpopulation crisis that have “run out of time” at a shelter. But there is another, entirely different group of pets that are unnecessarily euthanized—those whose owners can’t afford their medical treatments. Veterinary bills can add up quickly and place a large financial burden on the family budget when there’s a crisis. Could your budget handle an unexpected expense of $5,000 to $10,000 or more? Pet owners must accept the probability that at one point in your pet’s life, it may become sick or injured. It happens all the time. Cancer, for example, occurs more often in pets than people.

PET INSURANCE

Where does pet insurance come in? One way to prevent having to choose between your pet and your pocketbook during a medical emergency to buy health insurance for your cat or dog. Far too often, pet owners must decide whether to pay for an extremely expensive medical procedure or choose financial euthanasia. An emotional decision like this can leave family members conflicted, filled with remorse, resentment, or devastation over having to put their pet down. Pet insurance can make state-of-the-art medical treatment and/or traumatic emergency care possible for many pet owners who might otherwise not be able to afford it and dramatically lessen financial euthanasia.

Nowadays you have a great variety of plans to choose from. Some plans cover all types of medical expenses, including annual checkups and vaccinations, while others cover only accidents and illnesses. There’s even a shelter plan for the recently adopted pet and a senior plan for older pets. Some plans offer multiple pet discounts and most plans allow you to choose your own veterinarian. Average premiums range from $240 to $2,500 per year, depending on your plan.

Another way to acquire pet insurance besides buying it directly from the provider is to work for a company that offers pet insurance as part of its benefits package, as some companies now offer employees an opportunity to buy insurance for their pets at a discount rate. This was unheard of in the past, but it’s becoming more popular as employers recognize the importance of pets in people’s lives. In fact, today, pet insurance is widely requested as a voluntary benefit, and although fewer than 22% of American companies currently offer it, the number is growing. Employers that offer pet insurance include Nestle, The Walt Disney Comany, American Express and Google just to name a few but its worth asking your employer if they offer it or would consider offering it as a perk.

Pet insurance offers high-quality veterinary medicine to all pet owners. Since pet care can quickly get expensive, insurance can help alleviate the financial burden so owners and veterinarians can make healthcare decisions for pets based on the best medical care options rather than on monetary worries.

WHAT IS PET INSURANCE?

Like all insurance, you’re paying for something you may never use. But in the event you need it, you want to be sure the coverage is there. Health insurance for both people and pets is a business and it stays alive by making a profit. By definition, pet insurance insures against emergency costs while charging monthly premiums whether or not claims are made. That, of course, is the essence of insurance. Either you take the risk or you pay the insurance company to take the risk on your behalf.

If you’re the kind of pet owner who would stop at nothing to save or improve the life of your pet, the dollars can add up quickly. A hit-by-car accident could easily cost upwards of $10,000 in vet bills, especially if your pet is in intensive care in a 24-hour hospital, which costs around $1,500 per day. You pay for insurance in case your pet needs medical attention that you can’t afford.

Pet insurance pays a portion of your vet bills in exchange for a monthly premium. Typically you pay the vet bill upfront and the insurance company reimburses you an amount that is stated in your policy.

Although there are differences, pet insurance is similar to human health insurance with deductibles, maximums, and co-pays. The portion that’s paid to you is contingent on your policy and the stated conditions that are covered.

Pet insurance ia not inexpensive or without its share of problems but its worth exploring to see if it is right for you.

The least expensive policies run about $30 a month, with premium plans up to $200 a month or more. The cost of insurance increases as the coverage improves. That means you could easily spend up to $17,200 on premiums over your pets lifetime.

HOW PET INSURANCE WORKS?

Is pet insurance worth the price? You need to weigh the cost of the insurance against the likelihood of submitting a claim. Pet insurance, like human health insurance, works best to cover unexpected and expensive situations. If your pet ends up hospitalized with a serious illness, coverage will be a godsend and can save you hundreds, if not thousands, of dollars. Pet health insurance is inexpensive compared to human health insurance.

There are two basic kinds of health plans. First, like human insurance plans, there are companies that pay a percentage of the charges after you pay a deductible first. Second, there are price-reduction plans that, for an annual fee, cover a small percentage of virtually any pet-related charges. Usually, the smaller the deductible, the higher the premium. As with human health insurance, the more expensive plans have higher limits.

Unlike human health insurance plans, though, pet insurance plans may have age restrictions, and there are limits to what a company will pay. Compared to human insurance, which offers a lifetime maximum of around $3 million, pet insurance offers a lifetime maximum of approximately $150,000. There are also per-incident limits and annual limits to what a company will pay out.

There is also pet life insurance, just like for people, where you pay a monthly or yearly premium in exchange for receiving a lump sum of money when your pet dies. There is an accidental death policy if your pet should meet with an untimely death. Some of these policies include bereavement counseling for the pet owner. Pet travel insurance is also available, which offers policies to pet owners for unexpected travel-related expenses for their pets, even if the pets are left at home.

TO INSURE OR NOT TO INSURE

What do you think the odds are that your pet will have an accident or become ill? You need to carefully analyze your pet’s lifestyle. Does it often get into fights with other dogs or cats, get into the garbage, have a tendency to eat non-food items, or have a pet’s family history of hip dysplasia, diabetes, or some other genetically predisposed condition? When it comes to pet insurance, you can’t decide on price alone, so arm yourself with knowledge to secure the insurance policy that’s best for you and your pet. I recommend that you add up how much you spend a year on veterinary care for each pet and separate the costs into routine care versus accidents and/or illness. Develop estimates for one to five years and then see how expensive the premium would be for the same period and how much of your expenses the pet insurance policy would cover. You also need to consider the age of your cat or dog and their potential to have health problems. Usually, lower monthly premiums come with higher deductibles and/or larger co-payments.

ROUTINE CARE COVERAGE

Routine care includes all those treatments and vet visits that you bring your pet in for every year to promote its health, including annual checkups, vaccinations, and sometimes spaying or neutering. The benefits for routine coverage include not having to worry about what’s covered and what isn’t. Everything is basically covered, so all you have to do is send in the itemized bills.

On the other hand, many pet owners feel pet insurance should be for expenses that are unexpected, not for routine vet visits. Since premiums have to cover the cost of claims and other expenses such as sale commissions and administrative costs, you’ll pay more for a routine visit if insurance covers it than if you just pay out of pocket.

PET INSURANCE TIPS

Look for a health insurer that has been in business for at least a couple of years.
Ask your vet and other pet owners for recommendations.
Search the Internet for complaints against or praise for the insurance company you’re considering.
Make sure the company is licensed in your state. Not all plans operate in all states. Be sure to check that your provider is licensed by the Department of Insurance and is regulated in your state.
Contact your state’s Department of Insurance about the company you’re considering and any consumer complaints against it, and get the scoop on insurers operating in your state.
Read policies very carefully for conditions and exclusions before enrolling. Many policies don’t cover hereditary or congenital defects and others will cover preexisting conditions only if the dog or cat has not needed treatment in at least six months.
Consider the specific health needs of your dog or cat.
With new puppies or kittens, consider getting a policy that covers routine care as well as injuries and illnesses.
Think about your pet’s age. The best time to purchase a policy is when your pet is young. That way you won’t have to worry if your pet develops a long-term health problem and thus has a preexisting condition.
Consider plan affiliations. See if your employer or the pet-industry organization you belong to has an affiliation with one of the plans. Some companies make a contribution to premiums while others ensure employees get a group rate.
For older pets, consider policies that cover routine dental cleaning, prescription medications, and diagnostic tests such as blood tests, X-rays, ultrasounds, and EKGs.
The older your pet becomes, the more the premiums will cost and they can be quite high for an older pet, even a healthy one.
Read the fine print, understand the limitations, and look for exemptions.
Talk to other pet owners with insurance.
Consider your pet’s lifestyle. Active, outdoor pets are at higher risk.
Ask yourself if you’re looking for a discount plan or a comprehensive insurance plan. These can differ. With discount-fee plans, you pay an annual fee and get discounted veterinarian and related pet services. A comprehensive pet health insurance plan would look similar to human health insurance.

QUESTIONS TO ASK

Does the policy have deductibles, co-payments, and maximums, and how are they calculated? Some policies do, while others pay only a flat fee per ailment regardless of the actual cost. Does the provider pay the whole claim less the deductible or just a percentage?
Are there exclusions based on breed or hereditary conditions, and is my breed prone to medical conditions? What is excluded? Pet insurance exclusions can vary depending on the policy chosen. Common exclusions are preexisting conditions and many known hereditary conditions can exclude a pet from qualifying for coverage. Preexisting conditions such as diabetes or breed-based genetic ailments are often excluded. Preexisting conditions are typically those that have an on-going treatment or have been treated within the past six months. Ask your insurer if they will cover your pet if the condition has been cured. Also, coverage for common exclusions can usually be included in the policy for an additional cost.
If my pet develops any new conditions while I have this insurance, will she be covered by the insurance for the remainder of her life?
How much can you safely afford for your pet’s health care? Can you afford a vet bill of several thousand dollars?
Will my premiums increase based on my pet’s age or with veterinary care inflation? What can I expect my premiums to look like as my pet ages?
Think about your pet’s age. The older your pet, the more costly the insurance. The premium may not increase, but the deductible when making a claim for an older pet increases considerably. What ages of pets are accepted for coverage? Some policies have a limit on the age at the time coverage begins, or coverage may be dropped when the pet reaches a certain age. The age varies depending upon species, breed, and life expectancy, and if the coverage isn’t cancelled, the premium may rise. Does your rate go up as your dog or cat ages, or if he has chronic health problems? Some plans charge as much as $500 a year for older dogs.
Ask about exclusions. Some plans won’t cover senior canines and some won’t cover certain breeds.
Does the policy set annual, lifetime, or per-illness limits?
Can you choose your own veterinarian with your plan? As with human health insurance companies, some insurers mandate that you visit one of a limited number of veterinary clinics.
How many medical conditions are covered in the plan?
Does the preexisting condition list reset at the end of every policy year?
Which breeds are accepted?
Who decides what is excluded and why it is excluded?
What is covered and what is the amount of coverage in each policy? Some policies cover certain medical procedures only to a certain price level, while other policies cover a certain percentage of the price.
Does the policy cover routine exams, vaccinations, heartworm preventives, and dental cleanings? Some companies include this in the regular policy while others have this coverage available at additional cost.
Is there a maximum payout? Some policies may have a maximum payout per ailment, per year, or per pet.
For what reasons can the insurance company cancel the policy? Late payments or change in health and/or age of the pet?
Are you insured against damage to property if your pet causes injury to another animal or causes an accident? Homeowner’s or renter’s insurance may already cover this. Be careful, though, as some insurance companies (pet, homeowner’s, or renter’s) will cancel the policy if your pet bites and you keep the pet.
What are the waiting periods? Like all insurance plans, there may be a waiting period in order for the policy to take effect and you need to know exactly when your policy starts and ends.
Is spaying/neutering covered?
Does your policy include prescription coverage?
Are there any illness and incident caps? There will usually be a “cap,” or limit, on how much the insurance company will pay for a specific incident. For example, a broken leg may have a different cap than a neuter, so be aware of policy limits.
Is the company reputable and providing you with answers to all of your questions? Make sure you feel comfortable with the company you’re interested in, since they will be handling your claims. They should be willing to answer all of your questions thoroughly.
What are limits on annual, per-incident, per-illness, and lifetime costs?
Does the insurance company offer discounts for multiple pets?
Will the insurance policy cover any holistic treatments?
What is the term of the policy?
Are the vaccination protocols determined by the insurance company or the veterinarian of your choice?
Does the definition of “accident” in the insurance policy cover what your pet may likely incur? Some pet plans won’t cover injury arising from normal activity, such as joint injury from playing and poisoning from eating garbage.
How fast does the insurance company reimburse customers’ claims and does the policy have specific claim deadlines?

SELF-INSURE

Another option is to self-insure. In lieu of pet insurance, you can open a savings account for your pet and deposit a few dollars into it every week to pay for unexpected vet bills. Then you’ll know the money is there if you need it for your pet’s health emergency. Of course, this only works if you’re a disciplined person and can put the money aside in the first place. This is a step toward peace of mind, but it can be difficult not to occasionally borrow from the emergency fund. What happens when your pet’s emergency savings is used up? You have to start saving all over again. In addition, since the cost of treatments can be high, you could use up all you’ve saved on one accident or illness and not have enough money when another one arises. That’s why pet insurance is worth investigating.