According to statistics gathered by the American Pet Products Association, US pet owners spend an average of $29.3 billion USD on veterinary care and products for their four-legged companions each year.  And many pet parents are turning to pet insurance plans to help cover a share of those costs. The latest data from the North American Pet Health Insurance Association shows that pet parents paid $1.56 billion USD in premiums to insure more than 2.5 million pets in the United States. 

Depending upon the plan you choose, pet insurance may help cover the cost of a whole host of pet health expenses, including accidental injuries like broken bones, illnesses ranging from ear infections to cancer, and even congenital conditions like heart disease. 

But there’s another crucial detail to keep in mind when evaluating any pet insurance plan. “It’s important to understand how pet insurance deductibles work,” says Eric Coulson, Vice President, Strategic Partners North America for 24PetWatch Insurance Programs.  

No matter what costs a pet insurance plan covers, policy holders must satisfy the deductible before a reimbursement can be issued. 

Veterinarian with dog

What is a pet insurance deductible?

Deductibles are standard on insurance policies. It is the non-reimbursable amount the pet owner (policy holder) must contribute before the cost of eligible veterinary care is reimbursed.

According to Coulson, it’s important to understand the difference between a deductible and other pet insurance plan costs, such as premiums or co-insurance. Co-insurance requires policy holders to share in the costs of all eligible reimbursements. Policy holders pay a portion of each eligible claim, usually between 10% and 30%.  

The amount of pet insurance deductibles can vary widely. Your deductible could be as little as $100 or as high as $1,000 depending on the policy you choose and the age of your pet. 

How do deductibles work?

There are two different kinds of deductibles: an annual deductible is the amount you are responsible for each year before eligible veterinary treatments are reimbursed; a per-incident deductible is the amount you are responsible for each time your pet visits the veterinarian for a new condition.

24PetWatch Insurance Programs offer annual deductibles on all policies. You must satisfy the deductible amount each year (policy term) before eligible veterinary expenses are reimbursed. Once the deductible has been satisfied, the remaining eligible invoiced costs (minus the percentage you pay for co-insurance), are reimbursed through your pet insurance policy.

“With an annual deductible, you can have multiple claims in one year and once your deductible is satisfied, you don’t have to pay it again,” Coulson explains. “With a per-incident deductible, you can have multiple claims in one year that are all for different incidents — a skin infection, car accident, and foreign body ingestion — and each condition would have a separate deductible. So you can end up paying more.”

Annual deductibles are set each year and each pet insurance company takes a different approach to determine deductible amounts. 24PetWatch bases the deductible amount on the age of your pet at the beginning of each policy term. And that deductible amount increases, according to the age of the pet. For example, 24PetWatch deductibles are $100 for pets under two years of age and $500 for pets over age 10.

Deductibles are only applied toward eligible claims. If your insurance policy covers accidents and illnesses but not preventive care, the fees you pay to your veterinarian for rabies vaccines, heartworm testing, or annual blood work are not counted toward your deductible, according to Coulson.

Your insurance policy only begins providing reimbursement for eligible claims after the deductible is met. The higher the deductible, the longer it could take to be eligible for veterinary care reimbursement.

If your pet insurance policy has an annual deductible of $1,000, and your Golden Retriever suffers an injury that totals $850 for treatment, pet insurance will not issue reimbursement. However, $850 would be applied toward your annual deductible. Alternatively, if your deductible is $100, your pet insurance policy would offer reimbursement for the amount in excess of the deductible, $750 (minus your portion of the co-insurance).

Stack of money with a stethoscope

How to choose the right deductible for you

Your deductible has no impact on the quality of your pet insurance coverage. Pet owners with $1,000 deductibles receive the same great care as pet owners with $200 deductibles. You should choose a deductible that fits with your budget and risk tolerance.

In the USA, 24PetWatch has an age-based deductible, which means the deductible is based on the age of your pet. Other pet insurance companies offer different deductible ranges but, in general, “the lower the deductible, the less you’ll pay over the life of the pet,” says Coulson.

Choosing a lower deductible may be especially important if you have a pet with an ongoing illness, such as diabetes or congestive heart failure, or a breed at high risk of developing hereditary health conditions, such as hip dysplasia. 

If two pet owners have cats with diabetes that require $5,000 in medications each year, the pet owner with the $1,000 deductible will pay 10 times more out of pocket for the medication than the pet owner with the $100 deductible. That adds up to a difference of $9,000 over a 10-year period.

Your deductible also affects the amount of your monthly premium. In general, a lower deductible means higher monthly premiums, while a higher deductible is often associated with lower monthly premiums. 

You might be tempted to choose the highest deductible to keep the monthly costs low, but this approach could have serious financial consequences. 

Coulson notes that one expensive treatment—like a $3,000 surgery to remove a squeak toy accidentally ingested by a pet—could require you to cover the entire cost of the deductible at once. For many pet owners, paying a $200 deductible and leaving the insurance provider to cover the remaining $2,800 is preferable to paying $1,000 to satisfy their deductible before the insurance provider covers the balance on the bill.

Before you purchase a pet insurance policy, make sure you understand exactly how the deductible works to help you make an informed decision about the right plan for your pet.

Lady with dog on phone

Important questions to ask about deductibles

When comparing pet insurance policies, here are six important questions to ask about deductibles to help you find the plan that best fits your budget and your pet’s specific needs.

Is it an annual deductible or a per-incident deductible?
Annual deductibles reset at the end of each one-year policy term, while per-incident deductibles apply to each new illness or injury. An annual deductible is more predictable and could lead to lower out-of-pocket costs than a per-incident deductible, according to Coulson.

What deductible amounts are offered?
Some pet insurance providers let pet parents choose from a range of deductible options. When choosing a deductible amount, be sure to run through a variety of scenarios with the insurance provider, so you can understand the full impact of your deductible decision.

Does my pet’s age have an impact on the deductible?
Some policies tie their deductibles to age. At 24PetWatch, the deductible amounts increase with age. This can help to limit annual premium increases as the policy holder’s share of treatment costs grows with their pet. 

How does increasing (or decreasing) the deductible affect the monthly premium?
“In general, the higher the deductible, the lower the monthly premium,” Coulson says. Ask for examples of how increasing or decreasing the deductible amount affects the monthly out-of-pocket cost.

Which claims are covered before satisfying the deductible? 
Whether a deductible is applied annually or per-incident, the deductible amount must be satisfied before eligible claims can be reimbursed. 

Does pet insurance cover annual exams and preventative care? 
Typically, no. If you are interested in wellness coverage for annual exams, vaccinations, and other preventive care as well as accidents and injuries, some companies, including 24PetWatch, offer wellness care coverage endorsements for a little extra premium each month.

Without the benefit of a crystal ball, choosing the right pet insurance policy may seem difficult. Understanding how deductibles work won’t help you predict the future, but it can help you plan for it. For more guidance, call 24PetWatch Insurance Programs at 1-866-375-7387 to talk with an Agent and find the right policy to fit your needs. 

The information herein is summarized. All pet insurance plans have limitations and exclusions. Specific products, features, rates, and discounts may vary by state, eligibility, and are subject to change. © 2020 All rights reserved. 24PetWatch® Pet Insurance Programs is a division of PTZ Insurance Agency Ltd. (California residents only: PTZ Insurance Agency Ltd., d.b.a PIA Insurance Agency Ltd.).

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