How to Create a Low Cost "Health Insurance" Plan for Your Pet

How to Create a Low Cost “Health Insurance” Plan for Your Pet

The topic of veterinary cost is a very important one for our animal friends.  You see, there is a such thing as “financial euthanasia”.  This occurs when an animal becomes sick and their guardian is not able to afford the vetrinary bills to get them well again.  These owners will all too often decide to euthanize an animal that could have become healthy again with treatment.  I rescued my little animal, Tom Jones (the girl cat with a boy name), because she had some costly health issues that I knew I had the means to help her with.  Otherwise, it could have been the case that she would become a victim of financial euthanasia herself.  Here are some examples:

  • Tom Jones was rescued from a hoarder who could not afford to feed all of his kitties so he was feeding them his Meals on Wheels.  My heart really aches recalling this story.  I feel compassion for the elderly gentleman, and I feel anger that Tom Jones (and her other kitty friends) had such poor health due to bad nutrition.  In fact, it was originally estimated that Tom Jones was 8-10 years old based on the health of her teeth.  Her mouth was so diseased that I had to get every single one of her teeth removed.  The vet said that I literally added years to her life by getting her gums healthy again.  Her health, and mood, improved dramatically, but that came at a significant cost.  Turns out that Tom Jones is actually five years younger than the initial prediction plus she gets to live longer because of her better health.
  • Tom Jones also has asthma.  I found this out the hard way one early Spring weekend while I was doing a home improvement project that pulled up enough dust to cause an asthma attack.  Away we were to the after hours animal hospital where she had an overnight stay getting kitty nebulizer treatments.  That has happened three more times since then.
  • Tom Jones’s entire upper respiratory system is shot because she had never been given vaccinations for common kitty viruses.  She has to take immune supplements so that her nasal passages don’t swell up and make it difficult for her to breath.  She also needs to get ear drops to help with the swelling as well.
  • If that were not enough, Tom Jones also has food allergies.  This one took forever for me to figure out.  She was scratching at her ears a lot.  Her ears were clean and healthy (because of the drops), yet she scratched them until they turned bloody.  Then the vomiting started.  It took a total of three vet visits before a specialist diagnosed her with food allergies.  Fortunately, her health made a radical transformation, practically overnight, once her food was changed to a single novel protein and single carbohydrate (duck and green peas for those that care).

With all of her health issues, it would certainly help to have a health insurance policy for her much like I have for myself.  So, I did some research.  This is what I found out.

Is Pet Health Insurance Worth It?

For an answer to this question, I turned to Consumer Reports, and I learned some interesting things about health insurance plans:

  • Pre-Existing Conditions:  You see, there is no Affordable Care Act for our animals, which means that pet health insurance does not cover pre-existing conditions.  Going even further, a pet health insurer could potentially exclude a pet’s newly diagnosed condition from coverage at the time of policy renewal (typically once per year).   
  • How You Pay: Pet health insurance coverage requires a monthly fee, only covers what they consider to be “reasonable costs” for the care provided (oftentimes including a co-pay), and a deductible that typically ranges from $100 – $250 also applies.  The insurance company could also have a maximum limit on the treatment they will provide for an individual illness on either a yearly or lifetime basis.  
  • Extra Fees: Some insurance companies require a one time set up fee or will apply a surcharge if a customer pays monthly instead of annually for their plan.  
  • “Wellness Care” Options:  Many of these plans offer a “wellness care” plan of some sort.  This would cover routine annual physicals, vaccinations, etc.  It seems like the right thing to do, but it is definitely not.  You will actually save a good deal of money if you pay for wellness care out of pocket.  In one example, Consumer Reports used the ASPCA’s Level 3 coverage plan, which adds spaying or neutering, an annual physical, three common vaccines, and fecal and heartworm tests to its Level 2 accident and illness coverage. For the pet that they studied, the wellness care option cost $2,766 over a 10 year period.  However, it only paid out $1,159 in benefits. 
  • Vetrinary Fees are Often Not Included:  Let’s say Tom Jones had health insurance when she had her first asthma attack.  I rushed Tom Jones to the local after hours animal hospital.  The bill ended up being approximately $500.  It is likely that I would have been reimbursed for the x-rays and asthma treatments they had to do.  However, I would have had to still pay for the veterinary visit out of pocket, which would have likely been at least $200.  Also, if that were my first claim in a calendar year using the insurance, then I would have also had to pay the $250 deductible.  In other words, that visit would have been more expensive with insurance because I would have had to pay the full vet cost plus the cost of insurance.
  • Exclusions: There are certain conditions that pet health insurance policies will not cover.  For example, most do not cover hip dysplasia, which is a common chronic condition for dogs.  Each insurance company has their own list of what they will not cover.  Depending on the insurer, some will not cover certain breeds.  For example, QuickCare will not cover Chinese shar-peis (or even a mutt with shar-peis in its bloodline).
  • You Still Have to Pay the Vet First: Here is the little known fact about pet health insurance.  You still have to pony up the full cost of each vet visit regardless of if you have health insurance or not.  You then have to submit a claim for each expense that you wish to be reimbursed for.  The insurance company will then read your claim and determine how much you get reimbursed based on the “reasonable costs” for such services.  Each plan will provide a reimbursement schedule so that you can see how much they feel are “reasonable costs” for different tests and procedures.  

Here is the bottom line.  For a healthy animal, health insurance policies actually lose you money.  The same can be said for animals, like Tom Jones, that have a list of pre-existing conditions.  I would actually pay out more in health insurance premiums over time than those policies would pay out to me.  Health insurance policies only benefit pet owners when you already have a policy, your pet is diagnosed with a costly illness, condition, or accident, and the illness or condition is not excluded in your contract.  While the pet insurance companies have high ratings with the Better Business Bureau, the chief complaint in comments listed is a misunderstanding over contract terms.  If you do get a health insurance policy for your pet, then know what you are signing up for before you sign up.

To me, pet health insurance presents too many ifs for me to gamble on.  Let me show you what I do to create my own “health insurance” plan for Tom Jones instead.

How I Made My Own Pet Health Insurance Plan using a Reserve Account

In yesterday’s post “The Right Way to Put Your Pet on a Budget” I discussed that my pet budget has two line items:

Fixed Monthly Budget: Tom Jones has a fixed monthly budget of $50 for her food, litter, and more common supplies like charcoal filters for her fancy kitty water fountain.  

Reserve Budget:  I then have a second line item in the budget that is for “pet reserve spending”.  What I do here is I look at the big picture of the whole year, and I estimate the costs that vary month to month throughout an entire year.  Vetrinary costs are an important consideration here (as is hiring a pet sitter since I travel a lot).  After I add up what my estimated vet bills would be for a year, I then divide that sum by 12 to see the amount of money I need to set aside every month as a “health insurance” plan to cover Tom Jones’s yearly, and lifetime, vet bills.

I estimated Tom’s annual veterinary bills by understanding what her care needs are and then understanding the costs associated with these needs.  Here are the cost categories you want to consider.  A close acquaintance of mine (that also happens to be a veterinarian) recommends checking out the American Veterinary Medical Association (AVMA) for national cost averages as well as the  American Animal Hospital Association (AAHA) for information related to comparing veterinary hospitals.  Once you have selected a veterinarian, it would be good to discuss with them how much these services would cost so that you can get the best estimates:

  • Routine Annual Exam: Tom gets her yearly physical every year in September.  This is an important investment because if health issues are spotted early, then they will be less costly to treat.  This costs roughly $70 per year, and this includes her lab work.
  • Vaccinations: Tom Jones got a full set of vaccinations when she was rescued.  These were, unfortunately, the first vaccinations she had ever received, which is why her upper respiratory system is in such bad shape.  In any event, since she is an indoor kitty, and there are 5 doors between her and the outdoors since we live on the top floor of an old schoolhouse condo, I choose not to give her annual vaccinations.   This not only saves money but also protects Tom Jones from over vaccination.  If there were a greater chance of her accidentally getting outdoors, then I would consider more regular vaccinations.   For now, this cost is $0.
  • Spaying/Neutering: The no-kill animal rescue I volunteer at provided this as a part of the adoption fee. 
  • Professional Teeth Cleaning: Since Tom Jones no longer has teeth, this is now $0.  However, during her first few months with us, I had to budget $1,000 to get all of her teeth removed.  Gulp.
  • Medications: This one is also easy for me to estimate.  I need to spend $17 on Zymox ear drops a few times per year.  I also have to spend about $20 per year for her immune supplements.  Since she only has a few asthma attacks per year, max, the vet and I decided not to give her medication on a regular basis.  
  • Emergency Care: Since Tom Jones has asthma, I am familiar with the costs and relative frequency for her asthma attacks.  Luckily, they are not common.  Once or twice per year, and they typically happen in the Spring only.  These trips have cost between $250 – $500.  My husband and I have both learned how to do the heimlich maneuver on her as well as understanding how to protect a pet from common injuries to help prevent some costly accidents.  

In the end, I estimate approximately $600 in healthcare costs for Tom Jones per year.  This means that every month I set aside $50, which is then transferred to a prepaid debit card.  I use a prepaid debit card in case an emergency occurs when she is with the pet sitter while I am traveling.  Otherwise, I would transfer the funds to the reserve account I have for all such short term savings activities.  Over time this $50 per month adds up when it is not used and that sum will, hopefully, continue to grow year over year to cover what could be more costly treatments as she ages.  This gives me piece of mind knowing that she will never be victim to “financial euthanasia” if I do just a bit of pre-planning on her behalf.

Melody grew up in poverty, and she was homeless throughout most of her childhood. Even after the hard work of getting out of poverty was accomplished, she still lived in fear of the next bad thing that could happen. She knew that, without the security of a safety net, one misstep would mean certain disaster. It was not until this safety net was established that she truly felt liberated and free from the anxiety of living in poverty once again. She is now motivated to share this sense of freedom with all women.

1 Comment

  1. Linda P. 3 years ago

    Great article.

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