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Pet Health Insurance: Is It Worth the Cost?

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By    |   Friday, 29 Jul 2016 11:14 AM

Pet healthcare expenditures are costly — and rising — according to a new analysis of veterinary medical trends. The American Pet Products Association estimates that U.S. pet expenditures hit $60.59 billion last year — up from $58.04 billion in 2014.

A substantial portion of those costs are for vet care ($15.73 billion) and medicine ($14.39 billion). That breaks down to an average of $235 on routine vet visits for dog owners and $196 for people with cats. What’s driving those costs: Expensive new procedures, including surgery and MRIs, pet owners are choosing for their animals.

As a result, pet insurance has become a popular choice to help offset the costs of paying a veterinarian to diagnose, treat, and manage an animal’s illness or injury. Like human insurance, pet plans include deductibles, co-pays, and premiums — with monthly premiums starting at $22 per month for a dog and $16 per month for a cat.

But a new analysis by Consumer Reports points out that such plans vary widely, have coverage limitations, may not be right for every pet owner.

“The costs rise depending on your pet’s breed (purebreds cost more to insure because they are more susceptible to some hereditary conditions), age (plans usually cost more annually as your pet ages), ZIP code (the higher cost of vet care in some areas is factored into your premium), and the coverage you choose,” the CR report’s authors note.

“Medical treatment for dogs costs more than for cats. Some plans, like ones from the ASPCA, limit coverage to ‘usual and customary costs’ based on veterinary pricing in your area.”

According to CR, the North American Pet Health Insurance Association reports that 1.4 million pets in the U.S. and Canada are covered by insurance. That’s less than 1 percent of about 174 million pet cats and dogs, but up from 680,000 policies in 2008.

Major policy providers include the ASPCA (through Hartville), Embrace, Healthy Paws, PetFirst, Petplan, and Trupanion. Most cover only cats and dogs, but one company, Nationwide, also insures birds, rabbits, snakes, turtles, and other exotic animals.

If you’re considering pet health insurance, here’s a primer based on the new CR report and other experts’ advice.

How do the plans work? Unlike insurance coverage for people, pet policies usually require that you pay the vet bills in full and wait for reimbursement from the insurer. But some — like Trupanion — can disburse payments directly to vets on the day of service.

What’s covered? Plans typically cover costs due to injuries (from accidents, for example) and illness (arthritis, cancer, and colitis). Some pay for routine care, like annual exams, flea and tick treatments, and vaccinations. Eighty-one percent of pet insurance policies are accident and illness plans for dogs; 14.6 percent provide the same kind of coverage for cats and other pets.

What do they cost? Plan costs vary by breed, age, and coverage levels you choose, such as your deductible amount. Coverage per year averaged $473 for dogs and $285 for cats in 2014, according to trade industry figures.

Are coverage levels capped? Some insurers, such as Embrace and Healthy Paws, pay a flat percentage of covered costs after your deductible is met. Embrace allows you to pick the annual maximum amount it will cover each year ($5,000-$15,000); Healthy Paws and Trupanion have no ceiling. Others calculate reimbursements based on customary costs of vet care in your area. Some policies exclude pre-existing conditions and breed-specific conditions (or charge you more to cover them).

Are costs posted online? Yes. You can download sample policies from insurance websites for information on costs, terms, conditions, coverage, limitations, exceptions, co-payments, and even free quotes. Consider coverage with simple, percentage-based payouts. Find out how your premiums might increase as your pet ages.

CR also notes that pet insurance has become one of the fastest-growing voluntary employee benefits, with one in three Fortune 500 companies now offering it.

More than 3,800 companies and organizations have added Veterinary Pet Insurance (a Nationwide Insurance company) to their benefits portfolio, including Chipotle Mexican Grill, Deloitte LLP, Delta Airlines, Hewlett-Packard, Microsoft, T-Mobile, UPS, and Xerox.

In addition, some companies are subsidizing a percentage of their employee's cost, with several companies now paying as much as 100 percent of their employee's pet insurance premiums.

Membership in some organizations — such as AARP and AAA — may provide you with breaks on pet insurance premiums, as well.

Healthy Paws, for example, provides a 10 percent lifetime discount to AAA members, while PetPlan gives AARP members and active-duty or retired military personnel a 10 percent discount if they sign up for a plan online.

If you’re not sure that you want to pay for pet insurance, there are other ways to save on healthcare costs for your pet. Among them:
  • Start an emergency savings fund for pet care, just as you would for other unexpected rainy-day costs.
  • If you find you need help with a big pet medical bill, the Humane Society has a list of organizations that may help pay for it.
  • Take steps to keep your pet healthy to trim medical costs, such as guarding against parasites like fleas that can cause life-threatening anemia and ticks that can spread Lyme disease and Rocky Mountain spotted fever. Inexpensive topical solutions can keep the bugs at bay.
  • Talk with your vet about the medical costs your pet’s breed is likely to incur (you can also ask about his or experience with different pet insurers).
  • Ask your vet which vaccines you can skip. Some effectively prevent serious and costly diseases, but others — like ringworm, for example — are mild conditions for which vaccines aren’t very effective.
  • Spay or neuter your pet. Doing so can help prevent health problems, including some cancers. Many shelters or chapters of the ASPCA provide low-cost or no-cost spay or neuter surgery.

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Like health coverage for humans, pet health insurance policies are complicated and can be costly. A new Consumer Reports analysis finds some policies are better than others. Here’s what you need to know.
pet, health, insurance, cost
Friday, 29 Jul 2016 11:14 AM
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