Understanding terms associated with any insurance can be confusing, including pet insurance. I’ll fully admit that when I signed up for a property and casualty class, I had little to no clue what basic insurance terms meant.
Concepts such as “deductible”, “co-pay” and “premium” went way over my head. Thankfully, I’ve learned a lot since then! There’s no shame in admitting you’re confused when it comes to how your coverage works, so let me teach you a little of the insurance jargon.
Here are the definitions of some of the common pet insurance terms:
Deductible: This is an amount that is “deducted” or subtracted from your reimbursement; in other words, this is the initial amount you’ll be responsible for paying out of your own pocket before reimbursement can be applied. Note that some companies have deductibles which are applied to each individual incident or condition.
Co-pay/Reimbursement: Also called co-insurance, the co-pay is a portion of the bill (percentage or flat amount) that you’re responsible for paying and the reimbursement is the amount the insurance company will pay you back. With human health insurance, co-pays are usually a flat amount that you pay when you see the doctor. With pet insurance, a co-pay is deducted from your reimbursement check.
And, like deductibles, each company calculates their reimbursement differently. Some apply the co-pay to the total and then subtract the deductible. At other companies, you first pay the deductible, then you are reimbursed the remaining amount minus the co-pay. It can make a difference in how much you get back.
Here is an example of reimbursement before and after the deductible so you can see the difference:
Co-pay then deductible:
$5,000 vet bill
Deductible then co-pay:
$5,000 vet bill
Maximum: We all understand the idea of “maximum” but every company has a different idea of what that means in terms of benefits. Most companies have a yearly maximum benefit and/or a lifetime maximum benefit. Other companies also apply a maximum amount to each condition, incident or body system.
To make things even more complicated, some insurance companies say that once your vet bills have hit a maximum total they’ll stop reimbursing. That means your vet bills could be much higher than your maximum, but because your deductible and co-pay amounts do not “count” toward the maximum you still have some coverage left.
Vet Bill: $6,000
-20% co-pay ($1,160)
Remaining allowance left on a $5,000 yearly maximum: $360
Explanation of Benefits (aka EOB): Yes, most insurance claims reps are guilty of using the acronym EOB with newbie clients. An EOB or Explanation of Benefits is a detailed breakdown of your vet’s bill, compared with what items were (or weren’t) covered and what your reimbursement amount is.
Pre-existing condition: This concept probably causes the most confusion in the pet insurance industry and with good reason. Every company defines pre-existing coverage in their own way and it can be very scary for pet parents who wonder what is, or isn’t, a pre-existing condition.
Most of us can agree that chronic conditions which are already showing signs or have already been diagnosed should count as pre-existing. This includes allergies, diabetes, cancer, arthritis, and so on. (How these conditions can limit your payouts can vary too…that’s an article for another day.) Some companies allow a condition to be considered “cured” after a period of time without symptoms.
But what about hereditary and genetic conditions? There are 2 ways that insurance companies determine whether a condition is pre-existing:
Genetically pre-existing: This issue arises when companies feel that a condition is pre-existing in your pet because it is an inherited trait, even if the pet has never shown signs or symptoms of that condition. Under this logic, if a perfectly healthy German shepherd puppy is enrolled in insurance and develops hip dysplasia 2 years later, the condition is not covered even though it is new to this dog. That’s because hip dysplasia is considered an inherited trait in German Shepherds.
Pre-existing because of signs/symptoms: This is a method that uses your pet’s specific veterinary history to determine what is or isn’t pre-existing. In the aforementioned example, the hip dysplasia would be covered so long as the first signs or symptoms in the puppy are found after the waiting period concludes. It doesn’t matter if the dog’s parents and all 9 of its litter-mates (as well as thousands of other Shepherds) have already had hip dysplasia. It only matters whether that dog was healthy when he was enrolled.
Waiting period: The waiting period is a defined length of time that has to pass before a condition can first occur and be considered covered. This means that in order to receive reimbursement, your pet’s illness or accident must first occur after the waiting period is over. To clear up a common misconception, it doesn’t help if you just wait and take your pet to the vet after the waiting period is over even if the condition became evident to you at home during the waiting period. It also doesn’t help to just hold onto your receipt and claim form until after the waiting period is complete. Your insurance company will almost certainly contact your vet to find out when the condition first became apparent or how long it had likely been an issue, so it does no good to wait.
Again, as with most things, the waiting period varies from company to company and is usually anywhere from 24 hours to 1 month. There may also be a longer waiting period for orthopedic conditions.
The best pet insurance offers coverage that’s broad enough for whatever care your pet needs and with enough options to get the perfect coverage for you and your pet.