Headline:  The little furry that could lead to fury.

Date: 1/29/2021

Body : I was just talking to a friend who has a wonderfully cute older Golden Retriever, named Maggie.   Maggie always wags her tail, brings you toys… and has cancer.  I got to see 1-2 of the bills for the canine oncologist, and it’s a good thing that he bought health insurance for Maggie.  I saw this related article in the Penny Hoarder Here’s How to Find the Best Pet Insurance for Your Needs (thepennyhoarder.com), and I thought it might be worth some reflection. 

How does pet health insurance work?

Pet insurance works very much like health insurance for humans.   Each month you pay a premium.  When you go for service, you pay at the point of service and then file a claim for reimbursement.   Your insurance applies the deductible and then sends you a check for the amount they agree to pay.  (Usually this seems way too small, but in pet insurance, this is often 70%-90%.)  Just as in human health insurance as your deductible goes up, your premium goes down.   It is all very similar.

What is not similar are the brands of insurance.   Generally speaking, there are 2 flavors of pet insurance: accident & illness and “accident only” policies.  The “accident & illness” policies cover both the acute, emergency treatment needed by a pet when they experience trauma, and the more chronic problems that come with illness.   But sometimes (often when you have older pets) insurance companies offer “accident only” policies with no other option.

Is there really a problem?

In a word, yes, there is a problem.   Per a 2014 study conducted by the North American Pet Health Insurance Association, less than 1% of cats and dogs are covered by such a policy.   The direction is positive though: in 2008, only 680,000 policies existed and in 6 years, the number of policies have more than doubled.  By 2019, more than 2.5 million pets were covered by some type of policy. (Just as a point of comparison, property & casualty insurance policies normally increase less than 5% per year.) Pet insurance is one benefit that many companies are finding to be very attractive to prospective employees.

 Things to consider

One of the top insurance products has a major restriction: There are sometimes few locations.  One plan offers wellness plans for your pet (makes sense: Encourage the humans to take good care of the pets and there will be fewer claims.)  One even offers something similar to a Flexible Spending Account, just like human health care.   So, as you can see, each policy is likely to have unique benefits and costs.   Interestingly a well-known animal welfare group offers a 10% discount for you second pet.  As it turns out, there is even one insurer who supports complimentary treatments including chiropractic care and acupuncture.    All of this variability makes it so important to read the contract carefully.

Although pet insurance only covers the cost of vet services for accidents and illnesses, many providers also offer a paid add-on rider that will reimburse you for the cost of common preventive and routine care, like annual vaccines and checkups.     This is uncreatively called a “routine-care rider.”  Some insurance providers also offer the option of a wellness rider for an additional fee.   When one pays this additional fee, chiropractic care, acupuncture and other alternative treatments are covered, in an effort to keep your pet healthy, and claims not to be substantial.   In fact, some companies also offer discounts on coverage if few claims are made.    (In some cases, these discounts are “stackable” to a certain extent, so you can qualify and get benefit from more than one discount at a time.)

Finally, please be aware that there is often a waiting period before benefits can be claimed.   Often, you have to have the insurance for 14-30 days before you can file for any benefits.   This prevents people from getting pet insurance just before getting an expensive diagnosis.

If you want to soar with the eagles, you have to cluck with the chickens.

The optimum time to obtain pet insurance is when your canine or feline is very small.   Companies charge much less for animals that are younger and probably not facing aging-related disorders.  Additionally, pre-existing conditions will often disqualify your pet from being insured, so, insuring them early will make this less of a problem.

How Much Does Pet Insurance Typically Cost? 

According to one report, the average accident and illness premium for a dog was about $585 a year in 2019, up from $566 in 2018. (Cats are less expensive to insure than dogs, with an average accident and illness premium of $350 in 2019.)  Pet insurance can vary a lot from company to company, and even breed to breed.   (For instance, German Shepherds will very often have hip problems that exhibit problems later in life.)  Please note that your zip code can also make a difference in price.   For a minor Midwest town, as compared to a major East coast city, the premium nearly doubles.

Saving money is very important, so it makes sense to do your homework carefully.  Compare several plans and carefully read the contract behind each so that you are not comparing apples to oranges.  (You can download sample policies from each insurance provider.  Beyond this, you have several other options to save money:

  1.  Consider getting an “accident only” policy.   This will minimize the premiums and routine pet care (paid out of pocket) averaged less than $250 per year, according to the American Pet Products Association.
  2. You can start an “emergency fund” for your pet.  In essence, with this option, you are opting to self-insure.   If you do this, and have difficulty paying a related bill, the Humane Society can be contacted.  The staff at the Humane Society will often have a list of organizations that can help you.
  3. Ask your vet which vaccine can be foregone.   For example, the ringworm vaccine is very expensive and not that effective in avoiding a relatively minor condition.  So, it might make more financial sense to skip it, and accept the risk.
  4. Be vigilant for parasites.  When playing with your dog or cat, pay attention to any new and unexplained bumps that might indicate ticks or other parasites.    To avoid most parasites, there are products that can be brushed into the fur, or installed into a collar.
  5. Spay or neuter your pet.   Doing this can help control the out of control pet population (and avoid potential disagreements with your neighbors.)  But, there are also health benefits to your pet.  If you need help funding the spay or neuter procedure, you can contact the ASPCA, which offers many low-cost or no-cost opportunities to get this service completed.
  6. Adopt your kitten or puppy.   Often the shelter will already have done the spaying or neutering, and you will not be asked to pay for it.   Furthermore, most of these wonderful cats and dogs have received many of their required shots, further minimizing your cost.

How are they doing in other states?

California has a pending bill that would require pet insurers to provide additional disclosures to consumers.  Particularly, some of these insurance companies use the services of a third-party administrator, and the presence of this “stranger” can confuse and anger the policyholders.   The pending bill would require these insurance providers to be much more upfront with the consumers about how day-to-day operations are done.


Best Pet Insurance Companies for 2021 (thebalance.com)

Is Pet Insurance Worth the Cost? – Consumer Reports

Is Pet Insurance Worth It? | Kiplinger

PIN-OP-19.pdf (naic.org)

Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice.   Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.

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