Comparing Pet Health Insurance to Human Health Insurance

Understanding any health insurance plan is challenging, whether it's a pet or human insurance plan. Human health insurance and pet health insurance have plenty of similarities, though they have many differences too.

Like human health insurance, pet health insurance is a way that pet parents can deal with unexpected medical costs. We'll discuss some common terminology and how these types of insurance differ so you know exactly what you're signing up for. First, let's take a look at the different types of human and pet insurance coverage.

There are a few different types of plans available through pet and human insurance providers. Here are the main types:

Accident: For both humans and pets, this plan only covers expenses related to accidents. Waiting periods for coverage may apply and will likely have some exclusions. 

Illnesses: For both humans and pets, this plan covers certain illnesses and may have some exclusions for pre-existing issues as well as waiting periods for coverage.

Wellness: This type of plan can cover your pet's routine annual wellness visits, with some even offering flea and tick treatments, dental care, vaccinations, spay/neuter, and other preventative care.

If you have a health insurance plan for yourself, then you're probably familiar with monthly premiums. A monthly premium is an amount you are required to pay at regular intervals to continue receiving insurance coverage.

While monthly payments are most common, some plans allow policyholders to pay their premium quarterly, semi-annually, or annually. For humans, the monthly cost depends on the chosen plan and how many dependents are insured. Age, location, and health and lifestyle factors (like smoking) may also contribute to your monthly premium cost. Monthly premiums for humans average around $150 to $200 per month for one person. 

Monthly premiums for pet insurance policies can range from $20 a month to over $100, depending on the:

• Age of the pet

• Level of coverage and type of plan

• Number of pets on the policy

• Pet species and breed

• Pre-existing conditions

• Deductibles and plan limits 

• Location

• Riders or addendums added to cover things not generally covered under the plan

Copays

Copays are a flat rate that you pay the doctor directly at the time of the visit. Many human plans have set copayments for various types of visits, services, and doctors. Copays are often required when purchasing prescription medication from a pharmacy too.

Deductibles

A deductible is an amount that the insured must pay before the insurance coverage kicks in. Deductibles are an out-of-pocket payment both for human and pet insurance policies. For humans, deductibles are often paid annually and are calculated per person insured or as a family unit. The deductible amount will generally determine your monthly premium payment — the lower the deductible, the higher the monthly payment will be.

Coinsurance

Some plans also carry coinsurance clauses for the cost of procedures after the insured party meets their copay and deductible.

Coinsurance clauses usually deal in percentages that represent how much the insurance provider and the insured pay for a particular treatment. For instance, if the percentage is 70/30, you will have to pay 30% of the procedure cost before the insurance company will pay the remaining balance. There may be limits to the amount insurance will pay after the deductible is met.

How do copays, deductibles, and coinsurance work for pet insurance?

Pet insurance copays and deductibles work a little differently since pet insurance companies rarely pay out at the time of service. Instead, pet insurance carriers reimburse the policyholder. Most pet insurance plans require pet parents to foot the vet bill at the time of service. Pet insurance companies then pay out once the claim is processed, minus the copay and deductible and according to the coinsurance percentage. 

In the case of pet insurance, the deductible can be annual per pet, or more often, a per-incident deductible. This means every time you use your pet insurance for Fido, you will pay the deductible amount plus a percentage of the service cost.

Say your pet insurance has a $250 per-incident deductible with an 80/20 coinsurance percentage. For a medical service that costs $600, the insurance would require you to pay $250 for the deductible, then the 20% of the remaining balance of $350. The policyholder would have to pay $250 plus $70 for a total out-of-pocket cost of $320. 

Keep in mind that if the insurance company's usual payout amount for the service is less than the vet bill, then your expenses will be higher. Most insurance companies will not pay out more than their upper limit for certain treatments, leaving the policyholder responsible for the remaining balance — this is typically worded as "limited to usual and customary costs" in the fine print.

Most pet health insurance companies reimburse the policyholder for veterinary costs rather than paying the vet directly. Typically, the pet parent will pay for the services at the time of service and submit a claim to the company. Then, once the claim is processed, the pet insurance company will issue the policyholder a check. 

The reimbursement amount is the remaining cost after the copay and deductible have been paid and is calculated according to the coinsurance percentage.

Human health insurance providers will typically only cover medical costs for care performed by a specific provider network. Visits to doctors outside the network could mean higher rates or no coverage at all. Pet insurance, on the other hand, doesn’t normally have a provider network. 

Most pet insurance companies will cover for services rendered at any veterinary professional or veterinary facility licensed and operating within the country. However, a select few companies require providers to 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.

Unfortunately, accidents and illness happen all the time, and vet bills can be quite costly , especially emergency visits. These expenses may mean pet parents have to make difficult decisions.

Many pet parents have no choice but to choose "economic euthanasia" or putting their pet to sleep when they can't afford a vet bill. Insurance reimbursement can provide a financial cushion when an unexpected vet bill hits and prevent these hard decisions from having to be made. Ultimately, it's up to you whether or not insurance is right for your pet, but it definitely has some financial benefits, if you can afford the monthly premiums. 

Are you shopping around for pet insurance? Check out our pet insurance comparison tool on our Wellness page.