Smart Pet-Insurance Decisions

Avoid disappointment-choose the plan that fits you

In August, the American Veterinary Medical Association encouraged veterinarians to educate their clients about pet health insurance, saying it “may be an important approach for the veterinary profession to continue to provide high-quality veterinary services.”

That’s because, as with human medicine, cutting-edge expertise, technology, and medicines are available, but the cost can put needed care out of reach. According to the American Pet Products Association, the cost of veterinary care increased 6.1% in 2018 and is expected to go up another 4.8% in 2019. The need for pet health insurance—and the need for pet owners to understand what it can offer—has never been greater.

Cost vs. Coverage

There are many pet health insurance companies to choose from, and their rates can vary significantly. The North American Pet Health Insurance Association ( lists 20 insurers in its roster. Remember that monthly premiums should not be your only deciding factor and that possible out-of-pocket costs, policy caps or limits, and any excluded benefits should be carefully considered.

Out-of-pocket costs include deductibles and co-insurance. Co-insurance is the percentage of the covered fee that you need to pay. For example, a 70/30 policy means that the insurance will pay 70% of the allowed amount (which may or may not match your veterinarian’s bill, more on that later), leaving you responsible for the remaining 30%. Consider that many cancer treatments, for example, can ultimately cost $10,000 or more, and that a 30 percent co-insurance on $10,000 is over $3,000, not counting any remaining deductible amounts you need to pay.

Deductibles generally range from $50 to $1,000. Carefully read your contract to see how the deductible applies. Some policies issue a per-incident deductible instead of an annual deductible. With a per-incident $250 deductible, for example, you must pay the first $250 of every claim you submit. With an annual $250 deductible, you pay the first $250 for the entire year’s claims.

Be aware that most veterinarians require you to pay for service up front and be reimbursed by the insurance company. While a few companies will reimburse the veterinarian directly, few practices will accept that as payment.

Tricky Traps

Check the policy to find out if the insurer reimburses based on actual cost/fee or on a “reasonable and customary” fee schedule. Actual cost refers to what is marked as the charge on your bill when you leave the veterinarian’s office. A fee schedule is a ballpark pre-determined payment, usually based on geographic area. It is also a good idea to check whether the policy covers drug costs.

No pet health insurance company will cover pre-existing conditions, and most have a waiting period before coverage kicks in. This means if you sign up for a policy with a 14-day waiting period on Monday and Fluffy is diagnosed with cancer on Tuesday, that policy will not cover Fluffy’s cancer treatment.

Some insurers have incident caps (maximums), annual caps, and lifetime caps on how much they will pay out. These caps may keep your premium down, but overall caps can be frustrating. If chemo treatments, for example, cost $10,000, but your per-incident cap is $5,000, you will pay the remaining $5,000 yourself.

Be sure that you understand what your responsibilities are, too. Not only do you have to pay the monthly premium, but a company may require proof of routine veterinary care. For example, most policies state that they do not provide coverage for a disease that is preventable by vaccination. However, some policies do not list which vaccines are required, so be sure you ask and get the answer in writing.

Also, be aware that not all policies cover the veterinarian’s office examination fee. Some only cover things like diagnostic tests, surgeries, and medications. The examination fee can range from about $50 to over $250 for a specialist. If you’re the type of person who frequently takes your cat to the veterinarian, you may want to consider a policy that covers examination fees.

Keep in Mind

One of the most important things to look for is “continual coverage for chronic conditions.” Without this stipulation, you could find yourself out of luck if your cat gets cancer or diabetes. Make sure that a company will not cancel your policy because your cat becomes chronically ill and that the coverage will continue in full if this occurs.

Prepare for increases in premiums as the years go on. Although most policies have limits on ages they will cover, the scope of veterinary technology continues to expand, and the costs associated with care continue to rise, making pet health insurance a very attractive option.

Finally, when applying for your policy, make sure you answer all the insurer’s questions (i.e. cat’s age and medical history) honestly. All policies require a veterinary exam before being approved, and failure to fulfill this requirement may result in a company refusing to cover veterinary fees or, in the worst-case scenario, policy holders being charged with insurance fraud.

Insurance Jargon

It’s important you understand what the terms in your policy really mean

Illness coverage takes care of veterinary expenses when your cat is sick. Beware of specific policy limitations.

Accident coverage covers your pet if he is injured, such as can occur after being struck by a motor vehicle or falling from a high place. Accident-only policies are generally less expensive because the chances of your cat being hurt in an accident aren’t as high as him becoming sick.

Drug/prescription coverage isn’t always included. It’s impossible to predict which medications your cat may need or the cost of drugs. Avoid limitations here.

Alternative therapy and herbal treatments are covered in some plans, but most offer it as a rider. Policies can be very specific as to what they will cover so look for things like hydrotherapy, acupuncture, and chiropractic treatment, which are being more commonly recognized as viable rehabilitation and pain-control therapies.

Wellness coverage refers to routine care, including vaccinations, heartworm tests, neutering, and dental cleaning. This is usually only offered as a rider, and there’s a lot of variation among insurers in this regard. Many policies have caps on the amount they’ll pay for wellness coverage.

Exclusions will be spelled out in your policy. Read this section carefully before you sign, and question any vague descriptions. If possible, get your questions answered in writing (one of the great things about email—you can print out the answer and tuck it away with your policy).