How do pet insurance claims, payout limits, and deductibles work?
Pet insurance is a type of health insurance that typically uses a reimbursement system for veterinary and wellness care. That means that most companies require pet owners to pay the veterinary bills up front. Afterward, they file a claim to be reimbursed for a percentage of the vet invoice. The reimbursement amount is usually between 70 and 90 percent for all qualifying treatments.
Some pet insurance companies, like Embrace, Pets Best, and Healthy Paws, offer a vet-direct payment method, similar to human health insurance. That means that the insurance provider will pay its portion of the vet bill directly to any clinic, rather than wait through the reimbursement process. The reimbursement process typically takes 10 business days. Some companies, like pet wellness company Wagmo, can complete them within 24 hours, and others, like ASPCA pet insurance, can take upwards of 30 days.
Deductibles are like co-pays, which means they are paid out of pocket before your insurance can make any reimbursements. Policyholders are typically required to meet either annual or per-incident deductibles.
Choosing an annual deductible means that policyholders only have to meet the deductible once per year. They are usually between $100 and $1,000. The higher the deductible amount, the lower policyholders typically pay each month.
Choosing a per-incident deductible means paying a deductible every time your pet has a different condition. Depending on the company, selecting a per-incident deductible could mean a cheaper monthly premium. However, if your pet gets sick multiple times per year, it could cost you more out of pocket.
Payout limits are among the most important aspects to consider when looking into pet insurance because they determine the total amount of money that the pet insurance provider is willing to pay toward all medical bills. Most insurance providers offer annual payout limits, but some include incident and lifetime payout limits. The amount of the payout limit plays a significant factor in determining the monthly premium and determines the amount of accessible vet care.
Annual limits can range from $2,000 to $100,000 per year, and some companies even offer an unlimited yearly payout. Choosing a $2,000 payout limit might lessen the cost of your monthly premium. Still, it won’t be beneficial if your pet were to develop an expensive disease, like hip dysplasia, or require cancer treatments.
Some companies, like AKC, implement an incident policy, which also lowers accident and illness coverage. Incident limits are the set amount of money that an insurance provider will pay toward a specific condition for the remainder of the pet’s life. That could impede care for congenital conditions and recurring illnesses. The maximum incident limit depends on the company, but AKC only offers an $8,000 incident limit. That means they will stop reimbursing any veterinary costs after $8,000.
Lifetime payout limits are another factor that could hold back critical veterinary care. These payout limits refer to the maximum amount of money that the insurance provider will pay for your pet for the entirety of its life. Providers like Trupanion don’t have payout maximums, but some providers will cap your coverage as low as $150,000.