Pet Health Insurance Is Far Easier to Understand than Policies for People

A family rescued a dog from a local shelter, took him to the vet to treat a minor ear problem and learned a profound lesson: “It tells you everything you need to know about the U.S. health-care system that you can get more comprehensive coverage for a dog than you can for a human being.”

That was the conclusion of David Lazarus, a consumer business columnist for the Los Angeles Times. After taking care of Teddy’s ear, Lazarus looked into the whole animal insurance market and found out that there are about 1 million pet-insurance policies in the U.S. and Canada, mostly covering dogs, and that there’s an industry group called the North American Pet Health Insurance Assn.

It’s a $600 million market that addresses our fears that our pets will succumb to bacteria, viruses, cars, fights, snake bites and who knows what else. Beyond worrying about the animals, we also should worry about the financial cost of some of these perils. “Your dog gets hit by a car. He needs $7,000 worth of work. It’s that simple,” said one vet.

Lazarus interviewed one animal insurance company founder who observed that health insurance for people is too complicated. “I’d rather have animal insurance for myself than people insurance,” he said.

Pet insurances falls into three kinds of policies:

  • accidents only
  • accidents and illness
  • accidents, illness and wellness

Most people who insure their pets – more than 9 in 10 – choose accidents-and-illness plans.

The average premium last year for accidents-only plans was $166.25 for dogs and $136.26 for cats. Accidents and illness premiums averaged $456.98 a year for dogs and $289.99 for cats. Comprehensive coverage cost $1,178.13 for dogs and $743.11 for cats.

Lazarus discovered things that people seeking to cover their own species, as well as their four-footed friends, should know. “There are some obvious differences between pet insurance and people insurance,” he writes. “For example, Anthem Blue Cross isn’t going to want to know your breed when deciding rates.

“But shopping for both forms of coverage can be very similar.”

Here are his tips for animal insurance shoppers:

  • Shop around. About a dozen leading providers offer pet insurance in the U.S., and each has different types of coverage for different prices limitations. “As with human health insurance,” says Lazarus, “it’s not one size fits all.”
  • Read the fine print. Unlike people policies that adhere to the provisions of the Affordable Care Act (ACA), most pet-insurance policies don’t cover pre-existing conditions. Some don’t cover congenital problems (those present from birth) and hereditary problems. Also in a departure from the ACA, they cap how much can be paid out in a single year.
  • Explore your options before you choose a pet. Some pet insurers impose rates according to breed – English bulldogs, for example, can cost more to insure because they’re known for having certain medical issues other breeds don’t. And often, rates vary for animals of different ages.

Like medical care for humans, wellness and preventive treatment that might seem optional can save money over the long term. Ask about policies that cover routine visits to the vet.

Also like human coverage that comes with lower rates if you cover your home, car and life, some pet insurers drop the cost for covering more than one animal.

The leading provider of pet insurance is Veterinary Pet Insurance (VPI). It’s more than 30 years old, and – fun fact! – issued its first policy for the dog who played Lassie on TV. VPI accounts for more than half of all policies written. Keep in mind that its benefit schedule, according to Lazarus, limits reimbursements for various treatments. So some vet bills might exceed the company’s claim levels.

Policies offered by Healthy Paws invite you to choose among three options for reimbursement and deductible – 90%, 80% or 70% of medical costs, for yearly deductibles of $100, $250 or $500. Different combinations will give you different quotes, and everything is covered except pre-existing conditions and routine checkups.

PetPartners, (not to be confused with the nonprofit organization Pet Partners, which supports animal therapy programs to improve human health), excludes a long list of specific medical problems, including diabetes, osteoarthritis and hip dysplasia, a common ailments among larger breeds of dogs. But the exclusions are spelled out on the website.

Petshealth promotes itself as the “strategic partner” of the American Society for the Prevention of Cruelty to Animals.

But tons of companies offer policies to cover your pet, and we’re not in a position to recommend or disapprove of any of them. To learn more about the wisdom of buying insurance for Fido, read Consumer Reports’ analysis of pet insurance coverage and costs. Another examination is offered by MSN’s money site.

Review the information provided by the North American Pet Health Association, which promises to set high standards for the industry, coverage and transparency.

“[P]eople insurance is often a minefield of exclusions and sneaky provisions,” Lazarus concludes, “and insurers typically come off as reluctant partners, at best, in a policyholder’s well-being.”

When it comes to pets, however, that doesn’t seem to be the prevailing industry attitude.

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