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Cover Your Tail

By Jane Bennett Clark

The right pet policy can be man's best friend, but you have to vet your options carefully.

Harriet Budd has always gone the distance for her golden retrievers, including paying for care at the well-regarded Angell Memorial Animal Hospital, in Boston. So when pet insurance became available locally, the Newton, Mass., woman jumped at the chance to cover her companions, Henry and Sadie. She bought two policies from Veterinary Pet Insurance (VPI), paying about $900 in premiums a year.

"I thought it would be helpful for me financially in the same way it's helpful to have health insurance," says Budd.

For a while, the strategy paid off. Over the next few years Henry developed cancer nine times. One year Henry's hospital bills hit $5,000, about half of which was reimbursed. Budd felt that the protection -- including a cancer rider that cost about $30 a year and that doubled coverage from $4,000 to $8,000 per incident -- was well worth it.

But Budd had a different experience last summer when Sadie, 11, suffered paralysis of the vocal cords and underwent surgery. Sadie developed pneumonia, and after a few days in intensive care she died. Budd faced not only grief at the loss of a beloved pet but also a walloping $10,000 in hospital bills -- and a relatively paltry $2,400 in reimbursement because of policy limits on the various charges.

As Budd discovered, pet insurance can provide crucial backup in a medical emergency -- or it can snag you in a thicket of fine print that leaves pet and purse unprotected. While it's gaining in popularity, so iffy is the payback that only 1% of the nation's millions of dog and cat owners have pet coverage. Just 2% of U.S. employers make the policies available to their employees.

Meanwhile, a closer bond between humans and animals is leading more people to put themselves on the line for the sake of their pets. "How we regard pets has all changed," says Helma Weeks of the University of Pennsylvania Veterinary Hospital. "They really are part of the family now." According to a recent survey by the American Animal Hospital Association, three-fourths of pet owners said they would go into debt to preserve a companion animal's health.

And debt is a real possibility as owners contemplate everything from kitty CAT scans to feline kidney transplants, at prices that would make a Rottweiler yelp. Says Weeks: "It's very easy to run up a $3,000, $4,000 or $5,000 bill in a short time, depending on what the animal has." Although big-ticket procedures, such as feline kidney transplants, at $6,500 a pop, have upped the ante, even low-tech treatments can get out of hand. For example, a simple canine ear infection can run as much as $1,000 if it's not diagnosed quickly, says Jo Ann Duarte of Pet Insurance Now!, based in Bay Shore, N.Y. Cancer treatments, including radiation and chemotherapy, approach $10,000.

To ease the pain, some people are taking a second look at pet insurance, a decades-old concept now being touted in TV ads and online, sponsored by pet-care chains such as Petco, and offered by large employers. VPI, with 250,000 subscribers, has experienced a 40% increase in sales every year over the past five years, says Dr. Jack Stephens, the company's founder.

How it works

Generally, pet insurance offers basic fee-for-service coverage: You visit the vet or animal hospital of your choice, pay the bill up front, and then submit a claim. Depending on the plan, reimbursement may be 70% to 100% of the bill, after the deductible. Most insurers limit the amount they'll pay per incident and per year. Premiums on the policies average about $200 annually.

But comparing human and pet health insurance is like comparing kittens and puppies. Employer-based health insurance provides coverage at a set price to all members of the group, regardless of age or physical condition. With pet insurance, premiums are based on specific risks such as age, health and genetic makeup.

Consumer protections afforded human health policies, including coverage for preexisting conditions, don't apply to pet coverage. "It's more like car insurance," says Duarte. "You can't buy insurance to cover an accident that happened yesterday." Pet policies are considered property insurance and regulated by state insurance departments.

That distinction can mean gaps in coverage big enough to walk a Saint Bernard through -- as well as some nasty surprises if you don't pore over the policy before a crisis occurs. To make the most of pet insurance, "you have to read the benefits schedule, understand the exclusions and decide what your bottom line is," says Budd. "One size definitely does not fit all."

Not surprisingly, the lowest-priced insurance is available for pets that are fit, frisky and free of incipient problems, and live in areas where veterinary costs are low. If the animal barks or meows, so much the better. Only a few companies, including VPI, cover birds, ferrets and other more exotic pets.

You may be tempted to pay extra for a plan that picks up part of the cost of wellness care. Routine vet visits run an average of $120 a year for cats and $150 for dogs -- about what you'd pay for an upgrade to preventive coverage -- according to the American Animal Hospital Association. You're better off footing routine bills yourself and protecting against big-bang expenses such as surgery, says Duarte, who once spent $3,500 out of pocket to have a pair of stockings extracted from the stomach of her bull mastiff. "Buy the coverage for what you can't afford," she says.

Either way, don't wait until your pet is a senior citizen to sign up: Insurers usually write new policies for dogs through ages 8 or 9 and cats through ages 10 or 11, and they increase the premium as a pet grows older. Some companies allow you to continue coverage after the maximum age for enrollment, for a bump in premiums of up to 50%. Premiums in VPI's Superior Plan for a young standard poodle run $16 a month; the cost for an 8-year-old poodle starts at $28.

Protecting purebreds

Purebreds may present the picture of health as they parade around the ring, but experts say these cats and dogs are illnesses waiting to happen. "There's no doubt that the garden-variety mixed breed is going to have a healthier gene pool than a specific breed with specific problems," says Dr. Paul Gambardella, chief of staff at Boston's Angell Memorial. "With every breed, you can point to something that breed is prone to," including hip dysplasia in German shepherds and trick knees in pugs. Insurance policies often exclude such conditions or impose a surcharge on illness-prone breeds. Chinese Shar-Peis, whose deep skin folds foster multiple infections, are so vulnerable they're restricted to injury-only coverage.

Nonetheless, some companies will accept a claim if you can demonstrate that the condition wasn't present at birth. Russell Smith of the Petshealth Care Plan, based in Ohio, says a puppy certified by a breeder as problem-free would be covered under Petshealth for genetic diseases that crop up later. VPI is rolling out a rider with similar provisions, starting at $70 a year on top of existing premiums.

Most insurers decline to cover chronic or terminal illnesses that originate before the contract, as well as problems for which the pet has been treated within the previous three or six months. (In the case of Budd's dog Henry, the cancers occurred at longer intervals and were treated as separate episodes.) Illnesses that begin within the covered time frame can also end up costing you, depending on how frequently you make claims. For instance, VPI imposes a surcharge for frequent claims that is added to your premium when the policy is renewed.

To avoid that scenario, some policyholders absorb small expenses themselves and submit only big-ticket claims. PetCare Pet Insurance, a Canadian company with offices in Rolling Meadows, Ill., simplifies the process by dividing illnesses into 12 categories, with a lifetime limit for each. "It's up to you to decide how you want to spread the coverage," says CEO E. Mark Warren. "If you want to make a $60 claim, you can do that." For example, the lifetime allotment for skin-related problems is $3,000.

The fine print gets fuzzier with policies that rely on fee schedules, which are based on average vet costs and other variables. With VPI's Superior Plan, for instance, the most you can get for pneumonia diagnosis and treatment is $470, minus a $50 deductible and 10% co-insurance (10% of the benefit after the deductible). So your actual reimbursement would be $378, whether your bill was $470 or twice that amount. If pneumonia is considered secondary to the main illness, as happened in Sadie's case, you'd get about half the treatment amount. Reimbursement is further reduced if you've already used part of the benefit.

You can figure out your share by consulting the schedule included with your policy and doing the math up front -- if you have the presence of mind in an emergency. Still, the complexity of fee schedules means you may get far less than the 80% or 90% reimbursement you anticipated when you signed up for coverage.

In some cases, hindsight makes the footnotes seem bigger. When your reimbursement seems unreasonably low, you can appeal an insurer's decision by resubmitting the claim, along with a copy of the veterinary records. VPI forwards its appeals -- about 125 a month -- to a board of independent vets. "In 20 years, we've never gone against the board's decision," says Stephens. About half of the resubmitted claims are adjusted in favor of the policyholder, he says. As a last resort, you can complain to the state insurance department.

Ferreting out discounts

So where do you turn if your household includes a gimpy pug, a feeble ferret and five elderly cats? Consider a discount plan, which slices a straight percentage off the cost of services from participating providers. Pet Assure, with 2,000 participating vets nationwide, enrolls everything from quarter horses to cockatiels, for an annual fee of $100 for a single pet and $150 for "family coverage." That gets you 25% off every bill, no matter how extensive the treatment.

Renessa Krushinski, of Bedminster, N.J., figured a discount plan was the best deal for her menagerie, which includes three geriatric cats, a 9-year-old dog and four ferrets. She signed the whole gang up for Pet Assure and saved $350 when Hobie, a ferret, underwent surgery to remove a hairball from his belly. Recently, another of her ferrets was diagnosed with pancreatic cancer. Says Krushinski, "I use the discount a lot. I definitely do save."

As for what she and other pet owners are willing to spend to keep their pets hale and happy -- well, devotion to faithful companions can be hard to quantify. Budd says she wishes she had paid closer attention to the fine print before signing off on Sadie's treatment, but would have made the same decision anyway. She plans to continue insuring Henry, who just turned 10, indefinitely. "You do what you have to do," she says.

Reporter: Matt Popowsky

Should you have a concern regarding the health of your Beagle(s), you should contact your veterinarian. All information on this site is presented solely for educational and informational purposes and should not, at any time, be considered a substitute for seeking or receiving veterinary care for your Beagle(s).