Pet Insurance Deductible: A Barometer of Out of Pocket Costs

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Your Birthday Brings a New Dilemma 

Are you looking at the possibility of purchasing health insurance for that darling little puppy that hubby brought home to you for your birthday?  As you cuddle and play with your sweet little Mimi, you wonder if the costs involved with pet insurance will break your budget. After all, you’re paying for little Johnny’s orthodontics (braces for teeth) and little Jenny’s piano lessons, not to mention the car payment, house mortgage, utilities and that growing grocery bill….you wonder...where does it end?  How can I protect those I love (humans and pets) and still provide what they need and want?   You’ve got the health protection for the human family and now you’re considering something similar for Mimi.   

Your Journey Begins

As you consider this situation, it is important to understand that, during your research into pet insurance, you should leave no stone unturned when it comes to digging into and understanding what pet insurance covers and what it does not, as well as to what extent services are covered.  Just like your personal health insurance, your out of pocket costs are of primary concern and the deductible can sometimes be a barometer or a measure of what those out of pocket costs could be in the event that you need to utilize the benefits of the plan you choose. Here are a few ways that the deductible can have an effect on your overall out of pocket costs for Mimi’s health insurance:

  • Deductible defined

First of all, you need to understand that your deductible is the amount that you will have to pay before the insurance company will pay anything.  So, the higher the deductible, the more you will have to pay when you find it necessary to utilize the plan.  For example, if you choose a plan having a $250 deductible, then the first $250 of the charges will be paid by you before the insurance company kicks in any payment at all.   This will likely only be the beginning of the costs for which you will be responsible in the event that you need to utilize the plan.

  • Deductible amount can dictate your monthly premium 

The monthly premiums charged by the insurance company tend to reflect the potential for the insurance to be used by the purchaser.  The monthly premiums can vary under certain circumstances and the deductible is one of those circumstances.  Generally, the higher the deductible amount you choose, frequently, the lower the monthly premium amount will be for you.  The reason for this comes down to the extent of the insurance company’s financial responsibility when the plan is utilized.  They will not have to cover as much of the costs of services if your portion is higher for the services rendered. 

  • Deductible can affect the coinsurance you pay

The higher the deductible amount that you have to pay before the insurance company pays, the less the coinsurance amount you will pay after the insurance pays their portion.  For example, if your pet insurance plan has a $250 deductible and a 90/10 coinsurance, this means that:

  • You will pay the first $250
  • The insurance company will pay 90% of the remaining balance of service charges
  • You will then pay the remaining 10% of that balance 

Let’s put that into black and white numbers. For example: your vet charges $1,000 for a service, you pay the first $250, leaving a balance of $750 and of that $750 balance, the insurance will pay 90% ($675). This will leave you with another $75 on top of the initial $250, costing you a total of $325 for the services provided by your vet.  

  • Deductible can be annual, lifetime or per incident 

This is an area which can bury you if you’re not knowledgeable.  It is vital for you to know and understand as much as you can about that deductible.  Some companies will, much like your personal health insurance, charge an annual deductible for each pet, with some having lifetime deductibles while others will charge the deductible for each incident.  As you can imagine, this can become quite costly in the event that you have a pet who is accident-prone or very sickly.  Here is a brief explanation of each term:

  • Annual deductible means the specified amount of the deductible will need to be met (paid by you) before the insurance company will pay any portion of any charges for the rest of the calendar year
  • Lifetime deductible means that the specified amount of the deductible will need to be met (paid by you) before the insurance company will pay any portion of any charges for the lifetime of the insured
  • Per incident deductibles means the specific deductible amount will need to be paid by you each time you have an incident for which you use the plan

Food for Thought

As you can see, the out of pocket costs for pet insurance can mount up pretty quickly when the plan is utilized.  The deductible amounts can vary from plan to plan and from company to company as can the deductible periods for which those deductibles apply.  Many, if not most, companies who offer pet insurance have plans which can be customized to fit your budget and your pet’s health insurance needs, especially if your pet is a breed or species which has known congenital or hereditary health issues. Ask as many questions as necessary to understand what the company is offering and query multiple companies.  List each of them with their options and costs side by side so you can review and compare all necessary information to determine if purchasing pet insurance will be beneficial for your budget and your pet.