Comparing Pet Health Insurance to Human Health Insurance

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A Horrible but All Too Often Occurring Situation

Your neighbor’s dog got hit by a car last week.  We all agree that’s a horrible thing to happen. And now you see little Buster hobbling around with a cast on one of his hind legs as you’re talking  with your neighbor over the backyard fence.  The cost of his medical care comes up and you’re flabbergasted at the cost required to save Buster’s life.  Why, you didn’t even know they could do some of those tests on a dog, did you?  How about the costs related to the surgery to set his broken leg?  “Wow”, is pretty much all you can say to your neighbor.  As you walk away, heading back to the peace and safety of your own home and to your own little frisky poodle, Patsy, you wonder how you would handle a similar situation, how could you afford those seemingly exorbitant medical bills for your beloved canine family member….  

Do You Need Pet Insurance?    

Does this scenario sound familiar?  Do you know someone who has had to scrape and scratch to come up with the money needed to save their family pet’s life, perhaps “robbing from Peter to pay Paul” so to speak?  Do you know someone who had to decide if their canine family member was worth the cost of medical care (medical care versus euthanasia)?  While it is scary and painful to see your doggy family member sick or injured, it can be even worse when you face the potential medical bills and the decisions associated with those bills.  Pet insurance could be one of the options available help you deal with the problem.  

It is probably safe to assume that you’re among the millions of people across the United States who has health insurance for themselves and those they love.  It is also probably safe to assume that most of you don’t really understand some of the aspects of your health insurance and that you may not necessarily feel comfortable asking questions, if you knew the ones to ask in the first place!  So, if you don’t understand your own health insurance, how can you be expected to understand insurance for your pet’s health? We want to try to help clear up some of those foggy or muddy areas for you -- in both pet insurance as well as human health insurance.  We’ll talk about the pet side and the human side in each of these areas so you’ll be better able to relate:

Type of Insurance 

The types of insurances available for both pets and humans can vary from company to company:

  • Accident - For both human and pets it covers expenses related to accidents only, waiting periods for coverage may apply and will likely have some exclusions
  • Illnesses - For both human and pets it covers certain illnesses, mmay have some exclusions or pre-existing issues with or without waiting periods for coverage
  • Wellness - Just as in human insurance, this type can cover your pet’s routine annual wellness visits with some even offering flea and tick treatments, dental care, vaccinations, spay and neuter, as well as other preventative care

Is There a Network of Providers Involved?

Some human health plans provide coverage for medical care at reduced rates as long as the patient utilizes doctors and facilities which are in the approved network.  Higher rates (or no coverage at all) can apply to doctors and facilities outside the approved network.  This doesn’t necessarily apply the same way to pet insurance.  Generally, most companies will cover as long as a veterinary professional or veterinary facility is licensed and is operating within the U.S. or Canada.  There are some companies, however, who require that the veterinary providers be registered with the American Veterinary Medical Association (AVMA) instead of the Humane Society Veterinary Medical Association (HSVMA) or vice-versa.  This requirement could mean that you have to change veterinary professionals to utilize the policy.

Monthly Insurance Premium

This is the amount of monthly you are required to pay on a monthly, quarterly, semi-annual or annual basis to buy the insurance coverage being provided.  For humans, if you have a plan through your employer, your monthly rates have likely been negotiated and your main decision regarding the monthly cost is dependent upon which plan you pick and whether you insure any spouse or dependents.  For pet insurance, the monthly premium will be dependent on several factors:

  • Age of the pet being insured
  • Level of coverage and type of plan being selected
  • Number of pets being insured
  • Deductibles and plan limits
  • Area of region of the country in which you live or travel
  • Any riders or addendums added to cover things not normally covered under the plan, if available

Copay, Coinsurance and Deductibles

This area can be quite confusing for both human health insurance as well as pet insurance.  

  • Many human plans have copayments built in for various types of visits, services and doctors.  Some of these plans also carry coinsurance clauses for procedures or surgeries over and above the copay and deductible.  For example, there may be a copay for a surgical procedure which also may have a coinsurance percentage involved after the copay or deductible is met.  Copays usually aren’t an option in pet insurance.
  • Coinsurance involves a percentage to be paid by the insured as well as by the company for various services.  These amounts are expressed as fractions (80/20 or 90/10 or 70/30) meaning that the company pays the first percentage while the insured pays the second.  There are usually limits to these amounts once the deductible has been met.  This works similarly for pet insurance as well.
  • Deductibles are a major source of contention for many people, for both human health insurance as well as pet insurance.  This amount will generally determine your monthly premium payment as the lower the deductible, the higher the monthly payment will be.  Deductibles are amounts that the insured must pay before the insurance company will be pay anything.  So, basically for humans and pets, this amount comes directly out of your pocket.  And, for humans this deductible can be an annual one, calculated per person insured or as a family unit.  In the case of pet insurance, the deductible can be annual per pet but it is more often a per incident or event deductible.  This means every time you use your pet insurance for Fido or Fifi, if the event deductible is $250, you will pay that amount plus a percentage of (90/10, 80/20 or 70/30) of the usual and customary charge for the service provided. For example: a medical service which costs $600 with an 80/20 payment would require $250 to be paid by the insured for the deductible, then the 20 percent would be calculated on the remaining balance of $350.  The insured would be expected to pay $250 + $70 = $320 for the $600 procedure.  If the insurance company’s usual and customary charge for the service is less than the vet is charging, then your expenses will be higher because the insurance company may not pay more than its percentage of their lower usual and customary, leaving the insured responsible for the balance.    

Do You Need Pet Insurance?   

There are many more areas to be considered when contemplating the purchase of pet insurance but these are the ones which have the greatest influence on your decision as it applies to the monthly costs and budgeting for the insurance.  One of the most important things to remember when looking for and making decisions on the final pet insurance product, is to ask questions.  

Perhaps, this will be easier if you think of it as “any unasked question could result in an unpleasant financial or emotional surprise down the road”.  Insurance companies who are truly interested in providing you with an insurance plan designed to help you keep your pet healthy will be willing to freely and courteously answer those questions.  Helping you understand what you are buying will serve to establish a better working relationship with you and their company in the event that you need to utilize the benefits.