A Dog’s Purpose: Pet Insurance

“That’s the lesson of the dogs, that it’s important to both live in the moment and then go on to the next wonderful thing.”

A Dogs Purpose

Lucy arrived.  Who is Lucy? Lucy is a fifteen-pound golden retriever puppy my fiancé and I brought home.  She’s rowdy, soft and fluffy, and introduced a wet-nose, an inquisitive nature, and unconditional love to our life.  She also brought with her a big question: should we get pet insurance? You insure your house, car, travel, family members…yet many people questioned us: “Why do you need pet insurance?”  I’ll tell you why. Golden retrievers have a tendency to do silly things like run into cars, and to contract unsilly diseases, like cancer.  So to us the idea just made sense. The peace of mind alone, for less than $60 a month, made sense.

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A few quick things about pet insurance that I’ve learned.  Most pet insurance operate in a similar fashion.  You take your pet to the vet, and you get a bill.  You then submit this bill to your pet insurance.  You pet insurance makes you pay a deductible, and then reimburses a percentage of the expenses above that deductible. Some providers have funky offerings, like instead of yearly deductibles, they have deductibles for an illness, so you pay a deductible for one illness, and then anything related to that is covered for the rest of your pet’s life.  Useful if your pet has a chronic condition.  Otherwise, not so much.  

I did a bunch of research before settling on Healthy Paws and wanted to walk you through some of the bigger factors I looked at before deciding on which coverage to get.

1) Premiums

Premiums vary a lot.  Our premium is only $45 dollars a month.  One of the reasons we chose Healthy Paws is that the premiums were so low compared to most other insurers.

2) Customer Service

It’s hard to know how good the customer service will be before you sign up, but there are lots of blogs out there that rank and rate different insurance companies.  Health Paws came near the top on many such rankings.  Another that was mentioned often as a great one is Fido. Here’s a link to Consumer Advocate’s top ten rated pet insurance companies.

3) Waiting periods and pre-existing Conditions

Pets never got their Obamacare moment.  Pre-existing conditions are not covered under any insurance companies that I could find.  Also, many insurances have waiting periods for different conditions.  For example, Healthy Paws has a waiting period for illnesses and accidents of 15 days, and a one-year waiting period for hip dysplasia.  That means that anything that happens in those fifteen days is considered a “pre-existing condition” and isn’t covered.  Health Paws’ waiting period is actually longer than many other insurers, particularly the one year for hip dysplasia, and for that reason you might want to avoid it.  It wasn’t a deal-breaker for us because Lucy has no family history of hip dysplasia (knock on wood!).  Otherwise, we just have to hope all goes well for the next two weeks! (Knock on wood!)

4) Vet Exam Fees and Wellness Coverage

Most general pet insurance does not cover routine vet visits and vaccines.  In order to get these, you have to pay extra on your premium for what is generally called a “wellness plan.”  The general opinion on the internet is that these are not worth it as they jack up your premium beyond what you would pay if you just did it out of pocket.

The other part is that some insurance companies do not cover the vet exam fees for accidents or illnesses.  Healthy Paws does not.  Others like Pet Best and Figo do cover them.  This is another weakness of Healthy Paws, but I decided it didn’t outweigh the other benefits, particularly because we got the insurance to protect against if something really bad happened.  In such a scenario, the initial exam fee is not going to be the thing that breaks the bank.

5) Annual Caps

The other big factor I looked at when picking a provider and a plan was the annual caps.  Many plans have annual caps, some starting as low as $1000, for how much they will reimburse you per year.  Healthy Paws is one of the few that has no cap for any of their plans (several, like Figo, allow you to select an annual limit, or an unlimited plan, but the unlimited plans get much pricier).  Because the whole point of this coverage for us to protect us if things really go badly, I really didn’t like the idea of an annual limit.

6) Coverage Amount

Once I decided on a provider, I had to decide how much coverage to get.  Health Paws, and most other insurance companies allow you to select your reimbursement rate (70%, 80%, or 90%) and your deductible ($100, $250, and $500).  Here is a chart of the yearly premiums for Health Paws for the different deductibles and reimbursement rates (after the deductible is paid):

% Reimbursement Deductible ($) Premiums ($)
90 100 806.76
90 250 650.76
90 500 533.88
80 100 672.12
80 250 546.84
80 500 452.16
70 100 603
70 250 494.88
70 500 291.36

I ended up selecting the 80% reimbursement rate with a $250 deductible. This middle of the road plan meant that we were covered in case something really bad happened, but still weren’t pay through the nose for nothing if she ends up living the carefree (and floppy) life we hope she will!

If you are interested in Healthy Paws, here’s my referral link.  You should get a “Friends and Family” discount if you use it!

And for anyone interested in reading about a little math (woohoo!). . . . First of all, I’m not an actuary or a statistician, so please read this with a grain of salt.  But I did make an effort to break down the numbers a little further when deciding which amount of coverage to get.  Read on if you are interested.

Here’s how I did my math:

 First, I calculated the total yearly premiums for each amount of coverage, which I showed above.

Next, I dug a little deeper into each iteration of deductible and coverage amount.  I wanted to look at three things: (1) how much the insurance would pay out, (2), how much we would pay out, and (3), how much we would be paying for both premiums and out-of-pocket expenses.   To calculate how much the insurance would pay out, I created a formula: the amount of the vet fees (various hypothetical numbers), minus the deductible, and that number multiplied by whatever percentage that coverage covered (.9 for 90$, .8 for 80%, .7 for 70%). 

I then calculated the amount we would pay out of pocket for those vet fees after insurance.  To calculate that, I took the hypothetical vet fees, subtracted the deductible, and multiplied that number by whatever percent the insurance would not cover (.1 for 10% not covered, .2 for 20%, etc.)—representing the number after the deductible we would be responsible for–and then added the deductible to that number, to get the total amount we would pay out of pocket.

Lastly, I calculated the total amount we would wind up paying per year for each hypothetical vet fee, including premiums and out-of-pocket expenses.  To do that, I just added the yearly premiums to that last number I calculated, the out-of-pocket expenses.  For me, this is the money number, because it allows me to look at what my total cost will be in various situations, and I can measure that against the first number, which is how much the insurance is paying out, to see at what point we “break-even.”  Here’s a chart showing how much I would pay out in a year in total for a hypothetical set of vet fees, starting at $500 and going up to $2,000.

% Reimbursement Deductible ($) Personal Expense $500 PE 1000 PE 1500 PE  2000 PE 3000 5000 PE
90 100 946.76 996.76 1046.76 1096.76 1196.76 1396.76
250 925.76 975.76 1025.76 1075.76 1175.76 1375.76
500 1033.88 1083.88 1133.88 1183.88 1283.88 1483.88
80 100 852.12 952.12 1052.12 1152.12 1352.12 1752.12
250 846.84 946.84 1046.84 1146.84 1346.84 1746.84
500 952.16 1052.16 1152.16 1252.16 1452.16 1852.16
70 100 823 973 1123 1273 1573 2173
250 819.88 969.88 1119.88 1269.88 1569.88 2169.88
500 791.36 941.36 1091.36 1241.36 1541.36 2141.36

As you can see, I have bolded the top three most cost-effective plans for each column.

Lastly, I calculated the total cost for two years, one in which Lucy didn’t see the vet, and one in which she did, for each level of hypothetical vet fees (these numbers include the cost of the premiums).

% Reimbursement Deductible ($) $500 $1,000 $1,500 $2,000 $3,000 $5,000
90 100 1753.52 1803.52 1853.52 1903.52 2003.52 2203.52
250 1576.52 1626.52 1676.52 1726.52 1826.52 2026.52
500 1567.76 1617.76 1667.76 1717.76 1817.76 2017.76
80 100 1524.24 1624.24 1724.24 1824.24 2024.24 2424.24
250 1393.68 1493.68 1593.68 1693.68 1893.68 2293.68
500 1404.32 1504.32 1604.32 1704.32 1904.32 2304.32
70 100 1426 1576 1726 1876 2176 2776
250 1314.76 1464.76 1614.76 1764.76 2064.76 2664.76
500 1082.72 1232.72 1382.72 1532.72 1832.72 2432.72

Once again, I’ve bolded the top three most cost-effective plans at each level.  And the coverage I chose, 80% coverage with a $250 deductible, is one of the most cost-effective plans in this scenario until you get up to $3000 in vet fees, and even after that it stays in the top four up to $5000.

P.S. Yes, that featured picture is Lucy!

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