What is pet insurance, and how can I offer it?

Most people have various forms of insurance to cover themselves or their family members in case of emergency. However, that safety net is often forgotten for their pets. Almost 70% of Americans have a pet of some kind, and they’re not without cost. In fact, veterinary costs can average up to $500 per pet each year¹.

To help pet parents reduce the financial burden of caring for these family members, employers have started including pet insurance as an employee benefit. Even though this is a great way to attract and retain employees, only 15% of companies² provide it. This makes offering pet benefits a way to stand out among your competitors. But how do you get started?

This blog will take you through the ins and outs of pet insurance, how it works, what it does and doesn’t cover, and— most importantly—how you can offer it to your employees.

Adding fringe benefits to your compensation package is sure to impress your employees! Learn more about these benefits in our complete guide

What is pet insurance?

Like human health insurance, pet insurance is coverage designed to reduce the cost of a pet’s health care throughout their life. It’s most beneficial to get pet insurance early on in a pet’s life so they’ll have coverage in case they develop health conditions later on.

Many carriers only cover cats and dogs. However, there are a few companies that cover different types of pets. For instance, Nationwide covers avian and exotic pets, such as small mammals, birds, reptiles, and amphibians, and ASPCA offers insurance for horses.

Pet insurers offer three levels of coverage: Accident-only plans, accident and illness plans (also known as comprehensive coverage), and wellness plans. Unlike health insurance coverage for people, pet insurance doesn’t have provider networks, so your employees can typically use any vet, animal clinic, specialist, or emergency clinic they choose.

The average cost of a pet insurance policy will vary based on several factors, including:

• Location (i.e., state and zip code)
• The species of pet, in addition to their age, breed, and size
• The policy’s deductible, reimbursement percentage, and the annual limit
• The type of insurance coverage (i.e., accident-only, comprehensive, or wellness)
• Any optional add-ons
• The chosen insurance company

How does pet insurance work?

While some insurance companies will pay a veterinarian directly for a bill they issued for an individual’s pet care, most pet insurance runs on a reimbursement basis. This means that an individual must pay their vet for the total cost of a bill at the time of service, file a claim with their insurance company, and then receive a reimbursement for eligible expenses.

Many companies may require the pet to receive a check-up to scan for health issues and request their medical records before coverage starts. They may also choose to implement a waiting period.

Each pet insurance policy typically has four parts:

1. The premium: Like regular insurance policies, people pay an annual or monthly premium to keep their policy active.
2. The deductible: Owners must pay their insurance deductible, usually between $0-$1,000, before coverage takes over. While most companies have an annual deductible, some have a “per-incident” deductible, which means if an injury happens more than once, you don’t have to meet the deductible to receive coverage.
3. The reimbursement rate: Once the policyholder meets their deductible, the insurance company will reimburse them up to a certain percentage of the cost. The typical reimbursement rate is 50% to 100%.
4. The annual maximum limit: The insurer will determine the maximum amount they will reimburse during a plan year. If an individual exceeds the coverage limit before the year ends, they’re responsible for any additional vet bills until the policy term renews.

Once a claim is submitted and approved, it can take between a few days and a month to receive reimbursement. The length of time depends on the company, policy, the type of accident or illness, and if the policyholder requests reimbursement by direct deposit or a check via mail.

To ensure a smoother claim process, pet parents should save all receipts, relevant documentation, and medical records they received during the vet appointment if the insurer needs verification.

What does pet insurance cover?

Having pet insurance can take some financial pressure off your employees and give them peace of mind. However, depending on the type of plan, covered conditions and medical services will vary.

The following coverage is available under the three plan types below:

1. Accident-only plans: These plans cover emergency veterinarian services for accidents like swallowing objects, being attacked by another animal, broken bones, and wounds. Any preventive care or treatment for illnesses are out-of-pocket medical expenses.
2. Comprehensive plans: These plans are the most popular option as they cover accidents and illnesses, including allergies, cancer, congenital conditions, surgery, breed-specific ailments, ear infections, chronic conditions, and more. They don’t cover preventive or routine medical care, and have a higher premium than accident-only plans.
3. Wellness plans: Also known as routine veterinary care plans, wellness plans cover preventive costs, like annual check-ups, dental care, vaccines, exam fees, blood tests, and spaying or neutering. Pet wellness plans are usually an “add-on” option to an accident-only or a comprehensive plan at an extra cost.

Adding a wellness plan as optional coverage is the most expensive option, but it also gives pet owners the most coverage possible. To give your employees the most flexibility, you can offer all three options and allow them to choose the coverage that best meets their needs.

What doesn’t pet insurance cover?

Typically, pet insurance companies won’t cover any pre-existing conditions, non-veterinary costs, or routine care (unless the policyholder has a wellness plan add-on).

If you have employees that have a pet with a pre-existing condition, they can still get pet insurance. Coverage just wouldn’t extend to the condition that existed before coverage began.

Common types of services and conditions that pet insurance doesn’t typically cover include:

• Breeding
• Pregnancy
• Cosmetic procedures, such as ear cropping and tail docking
• DNA testing
• Accidents or illnesses caused by fighting, cruelty, or neglect
• Elective procedures
• Experimental treatments
• Hereditary conditions
• Behavioral issues
• Alternative treatments

Unless otherwise stated in the policy, everyday costs of pet ownership also aren’t covered. This includes things like food, toys, treats, vitamins, and grooming. However, some wellness plans will cover prescription food and even boarding fees. So it’s essential that policyholders check their policy carefully to know what medical costs qualify for reimbursement.

How you can offer pet insurance to your employees

Offering a pet insurance plan to your employees is an innovative way to boost your benefits package. And luckily, there are two ways you can go about doing so.

The first way to offer pet insurance is by getting a group pet plan directly from a carrier. Like employer-sponsored health plans, group pet policies can be offered to employees at a discounted rate or can be paid entirely by your organization.

If you decide to split the cost of pet insurance premiums with your employees, you can deduct the premiums from their wages, though those deductions must be made post-tax.

If you want to go the group plan route, make sure you offer more than one coverage option so your employees can choose the plan that will work best for their pets. This will make the benefit more likely to be used and give you the most bang for your buck.

The second way you can provide pet benefits is with a stipend. With a stipend, you can offer a set amount of money, or allowance, for your employees to use on an individual pet insurance policy of their choosing. Because stipends are so flexible, you can choose to cover more than just pet insurance policies and enable your employees to use funds on other pet care expenses.

For example, they can use it on expenses like routine care, vet costs, emergency treatment, pet food, grooming, boarding, and even pre-existing conditions, which most carriers don’t cover.

Stipends can be offered as a one-time payment, like a spot bonus or gift card. However, if you want to add more value, you can offer a stipend on a recurring monthly or annual basis and reimburse your employees when they incur an expense. No matter what type of pet they have, they can be sure their pet can get the medical treatment they need.

Conclusion

Many employees in today’s workforce care about their pets like they do a human family member. To support all your employees’ needs, you need to think beyond expected benefits like health insurance and retirement plans and consider adding things like pet insurance to the mix.

Showing your staff you care about every aspect of their family—including pets—will increase trust and satisfaction throughout your company.

Luckily, offering pet insurance doesn’t have to be pricey. With a stipend, you can give your employees a set amount of money to pay for their own pet insurance policy or vet bills directly without breaking your benefits budget. If you want to learn more about how PeopleKeep can help your organization offer stipends, contact us, and we’ll get you on your way!

1. https://www.cnet.com/personal-finance/heres-how-much-it-costs-to-own-a-dog-or-cat-in-2021/
2. SHRM 2019 employee benefits survey