Is Pet Insurance Necessary?
Learn about pet insurance, including the types of policies and whether it makes sense for you.
Pet health insurance is becoming more and more popular. About five percent of U.S. pet owners carry pet insurance, up from less than one percent in 1995. But pet insurance can be expensive. Before you buy, consider the various policies available, the cost, and what kind of care your pet is likely to need.
Vet Bills Higher Than Ever
The average dog owner spends $800 per year on veterinary care; cat owners pay an average of about $500 per year, according to the American Pet Products Manufacturers Association.
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Why so much? Health care costs have increased dramatically in recent years, in part because vets use more sophisticated diagnostic tools (MRIs and CAT scans, for example). These tools, which are pricey in themselves, detect problems that require further treatment. And those treatments, which now include such previously unavailable procedures as radiation and kidney transplants, are expensive.
Types of Policies
Several companies offer pet insurance these days, with a large variety of policy types and premium levels.
“Safety” plans. The cheapest policies cover only treatment for injuries, such as broken bones and bee stings.
“Wellness” plans. Wellness plans include routine care, such as physicals and vaccinations. Some experts say that the premiums, deductibles, and copays for these plans usually cost a bit more than paying out-of-pocket. Of course, if your pet gets injured, such a plan may save you money.
Comprehensive plans. On the pricier side, some policies cover a broad range of treatments, from cancer medications to acupuncture.
HMOs. HMOs for pets work like HMOs for humans. The pet owner pays a monthly fee. If the pet is treated by a vet participating in the HMO, the vet submits the insurance paperwork and gets reimbursed directly (if the services are covered by the plan). The downside to an HMO: it may limit your choice of vet, as many don’t participate in HMO plans.
Policy Exclusions and Limits
In addition to premiums, consider the coverage exclusions, limits, and other costs that are common to pet insurance plans:
- Deductibles -- for example, you may have to pay $100 or more out-of-pocket each year before the insurance coverage kicks in.
- Copayments -- for example, the plan may cover only 50% of treatment costs.
- Annual and lifetime caps -- once you go over the cap, you pay out-of-pocket.
- Exclusions for pre-existing problems, medicines, dental care, and other things.
- Exclusions for hereditary conditions -- often, coverage does not include health problems that commonly occur in certain breeds, such as bone cancer in Saint Bernards or hip dysplasia in German Shepherds.
- Benefit schedules -- the insurance company often sets limits on how much it will pay for a certain procedure. If the vet charges $300 to set a broken leg and your insurance policy caps the charge at $250, you’ll have to cover the remaining $50.
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