Monday, February 11, 2013

Pet Insurance De-Mystified?

Pet Insurance Can Be Confusing
Here is what the insurance companies show you, the consumer, in their commercials.

It's 2 AM and your dachshund, Penelope can't breathe and is whining in pain, you scoop her up and run to the nearest Emergency Vet who tells you that Penelope needs an emergency surgery, it will cost $4000.00 and he can't start until you have paid.  It'll be ok, you purchased pet insurance for Penelope when she was a happy little puppy, 12 years ago.  Everyone smiles - cut to Penelope, good as new, chasing the family cat.

Here is what the insurance companies show veterinary hospital staff when they are trying to convince us to sell their insurance to our clients.

Your client comes in with a sick animal.  It is something that you can fix, but the client probably can't afford the treatment. You give her your estimate and she says "No Problem, I've got insurance!"  Everyone smiles, even the pet. No paperwork for the staff and the pet gets the treatment.  Hooray!

Marketing makes the world go round.  I have no problem with the basic messages delivered.  The problems come, as you might have expected, in the details.  Most people understand how their own health and dental insurance works - you pay a monthly premium and maybe a co-pay when you actually visit the doctor.  The actual mechanics of the doctor getting paid is "under the hood" so to speak.  Your doctor or dentist employs people to file your insurance claims and follow up with them until payment is received, you just pay your co-pay.  This is why you usually can't go just anywhere for your care - you have to go to a doctor in your plan's network.  You have to seek out a doctor who accepts your particular insurance.

Pet insurance is altogether different.  The main difference is in the filing of the claim and the billing process.  With pet insurance you don't have to worry about which doctor you use because the doctor's office does not file the claim, you do.  Super huh?  Well here's the catch.  You have to pay the doctor just like normal, file the claim yourself, and then wait to be reimbursed by your insurance company.   Still, that is not so bad, unless you don't have the cash or credit available to cover the expense while you wait for the insurance company to reimburse you.

It may seem like I am trying to dissuade you from buying pet insurance, but I actually feel that it is a good thing to have if you can afford it and you fully understand exactly what it is you are getting coverage for.  Unfortunately, pet insurance is very much like all insurance.  They are for-profit companies and their goal is to pay out as little as possible.  Keeping this fact in mind, you must be sure to ask a lot of questions before committing to a policy.  Some of the gotchas I have seen in our practice are outlined below.

Pet Insurance Gotchas

1. Breed specific exclusions.

  Many companies will exclude specific ailments from specific breeds.  For example, in our first scenario about the dachshund, it would not be unusual for a company to exclude back problems for dachshunds because it is genetic for the breed.  You should always ask to see the exclusions for your pet.  We have had cases where the owner paid for treatments that were later determined to be related to breed-specific exclusions and subsequently denied payment.

2. Reimbursement Time

Be sure to find out how long they take to process your claim and issue a check.  Some companies are very good about this and take less than a week, while others will take weeks to months to pay you back.

3. Incident/Yearly/Lifetime Limitations

Many policies will limit the amount of money they will pay on any single claim, or per year or even per lifetime.  A $20,000 lifetime limit may seem like more than enough, but pets are living longer lives now and you may find yourself up against a limit.

4. Deductibles

Just like your car insurance, you can affect your pet's premium by accepting higher deductibles.  The deductible is the amount that you will be responsible for from any bill.  Some deductibles are per claim, others may be per year.  Be sure you understand your deductible choices.  If you have a $1000 deductible and your pet's bill is $1500, the company will figure your payment on $500 ($1500 - $1000).  If your policy paid 80% of your covered loss, you would collect $400.

5. Payment Schedules

Some companies will pay you a set percentage of your costs.  Others use payment tables.  Payment tables are lists of procedures and what the insurance company thinks is a reasonable price.  they base their payments on this table.  An example would be a hospital stay you paid $200 for.  If your policy pays 80% of your loss, then you might expect to get paid $160.  However, if your company uses a payment table that determines the hospital stay to be only $150, you will get paid 80% of the $150, or $120.

6. Accident Vs. Illness

Some companies make a distinction between accidents and illnesses like cancer.  Accidents will generally be covered, but expensive diseases like cancer or diabetes may have separate exclusions and limitations.  

Recomendations

Even with all the potential problems with pet insurance, it is still a good idea for most people.  You just need to make sure you understand what it is you are buying.  Although pet insurance has been around for a long time now, the industry is really getting going now.  I have been bombarded with insurance salesmen looking to get us to recommend their particular products.  It is difficult for us to do that because each client may be better served by a different policy from a different company.  

My best advice is ask a lot of questions.  Ask your friends that have pet insurance and have used it.  Ask the receptionists at your vet office about which ones they have seen used.  Call the companies and ask them specific scenarios - "Would my cat be covered for diabetes?", "Do you have specific exclusions for Yorkies?", etc...  

Hopefully this article will help guide your pet insurance decisions. Let me know if you have any questions about pet insurance and I'll do my best to answer them.

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