Being Canadian, health insurance policies are a whole unexplored subject for me. I was 16 when Canada got universal health care, just a year before the birth of my first child, Lucky us, to not have to find the money to pay for the obstetrician and maternity ward when we were struggling students.
“Nobody knew health care could be so complicated,” President Trump famously remarked.
Aside from prescription drugs, eyeglasses and dentistry, I never paid for a dime health coverage, until about a decade ago when the provincial government started levying a small premium at tax time. That premium ranges between zero (for those with a taxable income of $20,000 or less per year) to $900 per year for those with a taxable income of more than $200,000 per year. It’s added to our tax bill in April and then we go back to not thinking about it.
I’ve had a lot of medical stuff happen to me in my life, and I’ve never seen a bill, or had any questions about whether or not I was covered for anything I’ve ever been been hospitalised for, or consulted a doctor about (whether GP or specialist).
So if asked to weigh in on health care insurance in general, I would vote a hearty, hell yeah. But maybe this has created a sort of Canadian-bred naivety about health insurance policies. I find it difficult even to negotiate the byzantine complexities of buying ‘simple’ out-of-country health coverage when I travel.
It’s like dumping a member of one of those lost Amazonian tribes into the middle of Paris and asking them to deal with the complexities of the menu at Le Meurice. She might recognize “sea bass” but “on the scale”? They’re weighing it? Why? And what are “girolles” when they’re to home?
So, to paraphrase President Trump, little did I know that health insurance for pets could be so complicated.
Pet health insurance is a relatively new thing in North America. The first U.S. policy was written in 1982, to cover Lassie.
Hey, what with all the rushing headlong into danger against impossible odds, I’m shocked she could get coverage.
Pet insurance didn’t come to Canada until 1989. While the U.S. has double the number of companies offering pet health insurance than Canada, still, only about 1% of household pets are covered in the U.S.. Sweden and the UK were early adopters of pet health insurance (since 1947 in the UK) and have highest rates of coverage in the world. Yet less than a quarter of all domestic pets are insured even in those countries.
While it has been slow to reach a broad market, the buzz about pet health insurance seems to be building. In June, 2017, the New York Times published an article informing us that pet insurance is the latest perk being offered to employees by forward thinking companies. The article states that about 5,000 companies in the U.S. sponsor pet insurance benefit plans for their employees, where the company subsidizes all or part of the premium.
There are some similarities between pet health insurance and other kinds of insurance. The exclusions, deductibles, caps and schedules of benefits of any particular policy have to be closely examined in a cost/benefit analysis. Some of the same rules of thumb apply: the higher the deductible, the lower the cost of the policy; the more benefits included, the higher the price.
1. Is the coverage worth the cost?
That cost/benefit analysis is complicated. The most obvious difficulty is the same problem you have assessing the benefits of any insurance coverage. Will the risk you’re insuring against materialize?
If you pay $600 per year for pet insurance and your dog or cat stays healthy until they die of old age, you’re out $600 for each year your pet is alive. Assuming a life expectancy of twelve years, that’s $7,200. If you pay the $600 for a policy which covers bloat and your dog has to have the expensive operation, you could be in pocket that $7000, depending on your deductible and policy limits.
Which raises the second difficulty in assessing whether health insurance for your pet is worth it. Just how expensive will that bloat operation be?
Veterinary fees vary wildly from country to country, between areas of the country, from city to city, and from town to city and even within cities or towns. That huge veterinary hospital with state of the art equipment and a roster of specialists in everything from internal medicine to eye surgery has very high overhead.
Its prices will reflect that. On the other hand, the small veterinary practice in a little town has very low overhead. As we found when our dog had to have his eyes removed because of glaucoma [eventual link to the Taffy stories, and article on glaucoma], the cost quoted by our local, extremely competent vet was a fraction of what the big city veterinary hospital was going to charge us.
Insurance policy premiums aren’t based on local costs. You won’t get a break because you live in rural Appalachia, where vet fees are a pittance compared to what you would pay for a similar procedure in Manhattan.
The best you can do is find out the ballpark figures that your vet of choice charges for the procedures that would be covered by the policy you are considering. Then try to make an assessment of how likely it is your pet might need one or more of those procedures.
Do you have a Great Dane? About a third of Great Danes bloat at some point. Do you have a brachycephalic dog or cat? Then you are looking at an increased chance of heat stroke and other conditions such as glaucoma. Do you have hardwood floors and a dog who goes from zero to light speed when the doorbell rings? It’s well within the realm of possibility that your dog is going to blow a cruciate ligament at some point.
Sadly, insurance companies are well aware that some breeds are more susceptible to certain problems, and set they policy prices accordingly. Insurance still may be worthwhile because there is a higher chance that the problem will indeed occur, and the kinds of situations I’ve referred to, come with a heavy price tag at the vet’s.
Costs for a policy can range from $10 to $65 US per month and up. Cats cost less to insure than dogs. Mutts cost less to insure than purebred dogs. Older dogs cost more to insure than younger dogs.
In fact, it’s a really good idea to look into this as soon as you get your puppy or kitten, or adult dog or cat for that matter. If you decide to go ahead, you’re going to get the most benefit at the least cost, the younger you sign them up.
Don’t forget to investigate discounts. You may find that your membership in such groups as the AA, CAA, AARP or the military entitles you to a discount from certain pet insurance companies.
Consumer Advocates conducted a small study in 2016, and concluded that each of the four policies they looked at paid a benefit well beyond the cost of the policy if a serious condition like cancer occurred. But once you were out of the ‘catastrophic, serious illness or injury’ category, only one of the four policies paid out more than its cost.
2. What is covered?
The short answer is that it depends on the policy you choose. Yes, I know. Not helpful.
This is a simplification, but in Ireland, national health insurance (except for the poorest citizens, maternity and babies) essentially only covers major things. Most people are going to pay for their own routine visits to the doctor. The national health only kicks in once that family doctor refers the patient onwards to a specialist, a hospital or for certain kinds of test and procedures.
Bear with me. I do have a reason for this apparent non sequitur.
I find this model a helpful way to think about pet health insurance. Most people who invest in pet health insurance, do so primarily to protect against the possibility that a serious health crisis is going to arise with their pet. Most policies will not cover routine, preventative and elective procedures, such as vaccinations, spaying or neutering, or dental care.
For sure, polices with such coverage are available. You can even get coverage for your pet’s acupuncture, drugs or physiotherapy. Since pet insurance is a kind of amalgam between health insurance and property insurance, you can also get coverage if your pet is lost or stolen, just like your car. Do you want a payout if your cat dies while under anaesthesia?
Other bells and whistles can include covering your costs to cancel a vacation if your pet gets deathly ill and you want or need to stay home with him; the costs of boarding your pet if you are the one who gets sick and ends up in the hospital; funeral or cremation costs if your pet dies, or even the cost of printing up “Lost Dog” posters.
But the broader the coverage, the more the policy will cost.
In 2015, Consumer Reports concluded that the additional cost of coverage for routine matters like vaccines was not worth the price.
How the policy deals with pre-existing conditions is another area you will have to consider carefully. There are two aspects to this.
One is that certain preconditions will simply be excluded outright. You will be asked to fill out a questionnaire asking, among other things, what types of illnesses or conditions your pet has experienced. If you are not honest, your coverage will be voided.
Secondly, you will have to wait for a stipulated period of time after you buy the policy, before it becomes effective. This is to exclude any illness your pet might have already contracted when you signed up, but has not yet surfaced. Usually that period is relatively short – a few weeks.
So if your pet gets diagnosed with diabetes, and you have some idea of getting pet insurance to cover the costs of that, you can forget about it.
3. How are payouts calculated?
Altogether now: “It depends on the policy”.
One type of policy pays out according to a fixed cost schedule of benefits. You have the certainty of knowing that if your dog bloats and needs surgery, you will get up to a maximum of say, $3000, regardless of how much the procedure actually cost.
The other type of policy pays out a percentage of your actual veterinary fee, probably up to a certain amount per year.
Those amounts however, can be substantially reduced by the amounts of the ’deductible’, ’co-pay’ and ‘co-insurance’ in your policy.
Let’s look at a hypothetical situation. You take your dog in for ligament surgery Day 200 of the policy year. The bill is $2000. Your policy covers the cost of such surgery up to a limit of $2500. So you get a cheque from your insurer for two grand right? Not so fast.
You have a deductible as well as a co-pay provision in your policy.
The ‘deductible’ is a set amount that you have to pay before the insurance company pays you anything. Usually a deductible will apply for each policy year. Let’s say your deductible is $500 for the entire policy, not per claim.
In the hypothetical above, the insurer will pay you $1500, less the co-pay, because you have to contribute your deductible amount before anything else. We’ll get to the co-pay later.
Now let’s say Fido tears another ligament on Day 250 of the policy. You will be reimbursed the entire $2000 fee (less the co-pay), because the deductible has already been, you know, deducted for that year.
But if Fido waits until Day 50 of the next policy year before re-injuring himself, you get to pay another deductible.
The ‘co-pay’ is a fixed amount you pay every time you make a claim. Let’s say in this hypothetical, the co-pay is $20 per claim. You will end up paying $40 towards the two ligament surgeries, whether they happened in the same policy year or not.
Now let’s say instead of a flat fee schedule, you choose insurance that pays only a certain percentage of every eligible vet bill. For example, the insurance covers 80% of the bill up to a given amount. In that case, you are in effect the co-insurer for the 20% balance.
If that was the case in our hypothetical, you would only be paid $1600 of the $2000 bill for each of the two claims. Any deductible and co-pay would further reduce your reimbursement.
In the words of Lando Calrissian, “This deal is getting worse all the time!”
You may be given a choice between lifetime and ‘non-lifetime’ coverage. A lifetime policy, as you would expect, covers your pet for her whole life.
Let’s go back to our hypothetical. Your dog tears a cruciate ligament, then tears another a few years later. With a lifetime policy, she will still be covered for the second injury and any others that occur during her life. A ‘non-lifetime’ policy would only cover the first event. At the end of the policy year when you renew the policy, that condition will be excluded from coverage because the insurer has paid out for it once.
Even with a life time policy though, you need to read all the fine print. Every policy will have exclusions. Some conditions will be entirely excluded from coverage, but even where a condition is covered payment may be limited to a single occurrence of that particular condition, or a single occurrence per policy year.
Aside from capping payments on a per incident basis, there may also be a cap once the pet reaches a certain age, or over the lifetime of the policy.
Avoid policies which use language like “reasonable” when calculating what the payment will be for a certain covered event. You don’t want to get into an argument about what was ‘reasonable’. Instead, go for a policy where the method of calculation of the payout is clear – a percentage of the cost, or a fixed amount per procedure.
You can reduce the cost of your policy by choosing a high deductible and a low percentage pay out. (Chances are the co-pay will be set in stone.) But you have to weigh the lower yearly cost of the policy against the increased amounts you’re going to have to shell out if something bad and expensive happens to your pet. Again, it’s a cost/benefit calculation.
Typically, you will have to pay the vet up front, then submit your claim for reimbursement to the insurance company, and what for them to cut you a cheque.
4. Which plan is best?
At this point you won’t be surprised when I say that it very much depends on what coverage you choose and how you prefer to structure your plan in terms of deductibles, coverage and payouts. If you are looking for advice on specific plans, try online consumer research sites.
Here is a link to an analysis of three different plans by Consumer Reports.
Consumers Advocate ranks the ten ‘best plans’ in Canada.
There is even a site called “Pet Insurance Review”, which says it is not owned or controlled by any pet insurance company.
Make a list of the things that are important to you to have coverage for. Decide how you want to balance deductible amounts, reimbursement caps and what is covered, against policy costs. Then go shopping.
5. Some parting thoughts:
Only a tiny percentage of those who brought their pets to the pet resort had health insurance for them. In my experience, many of the people who did have it, bought it after running up huge vet bills with previous pet.
That was certainly our own experience. One year, we paid vet bills of over $10,000. Our dog Taffy had episodes of glaucoma, ending with the removal of first one eye, then the other. Then one of our cats developed diabetes and a couple of our other older cats got sick, involving first treatment, and ultimately euthanasia.
We thought about the pet insurance after that horrible year, but decided against it because we had so many animals at the time. Also, being as how they were all rescues, many of them had pre-existing conditions.
One of the big advantages of pet health insurance is that it can eliminate or at least reduce the economic pressure when making the already emotionally fraught decision about whether to try to treat your pet’s condition, or have him or her euthanised.
Instead of buying the insurance, you might consider self-insuring. Set up a dedicated savings account and each month pay into it the amount you were considering paying for pet health insurance.
Or, like the vast majority of people, roll the dice and pay as you go.
So many variables make it very difficult for anyone to say with any certainty whether having pet insurance will pay off for any particular individual. In terms of the odds at play, casinos are rank amateurs compared to the insurance game.