While your health insurance provider pays your doctor directly for treatments covered under your policy, pet insurance works on a reimbursement system. That means you pay your veterinarian for the full cost of care then file a pet insurance claim for retroactive payment.
Claim approval isn’t guaranteed. If the claim is approved, your provider still may not cover 100% of the costs. Your policy’s reimbursement rate is the percentage of covered claims (after your deductible) the provider will pay. The remainder is your copay, which you are responsible for. Typical reimbursement rates are between 70% and 90% of the bill minus your deductible.
For example, suppose you have a $250 deductible and an 80% reimbursement rate, and you file a $1,000 claim. If approved, you would be responsible for your $250 deductible and 20% of the remaining $750 (which is $150), totaling $400. Your provider would reimburse you $600 (or 80% of $750).
Below, we break down other important aspects of how pet insurance works.
- Deductible: Like personal health insurance, pet insurance doesn’t start paying until you’ve met your deductible or the amount you owe out of pocket first. Pet owners are typically only responsible for paying their deductible once per year.
- Annual limit: Each pet insurance policy comes with an annual coverage limit, which is the maximum amount the provider agrees to pay over a year for your pet’s veterinary expenses.
- Waiting periods: Pet insurance coverage doesn’t start immediately after enrollment. Instead, providers impose a waiting period before coverage begins. A waiting period is the period of time your insurer requires you to wait until your pet is eligible for reimbursement on specific conditions.
- Exclusions: No pet insurer will cover pre-existing conditions, which are any health issues noted by a licensed veterinarian before the start of your policy or during its waiting period. Pet insurance policies often include a list of additional exclusions, such as routine care, grooming and breeding costs, and non-veterinary related costs like food or supplements.
- Choice of veterinarian: Pet insurance providers don’t have networks of preferred caregivers. You can usually visit any licensed vet, providing more freedom in finding the right medical care for your animal.