What is a pet insurance deductible?

When shopping for pet insurance, one of the most important factors to consider is the deductible. A deductible is the amount you pay for veterinary expenses before your insurance begins to reimburse you. Understanding how deductibles work is crucial to making informed decisions about the best plan for your pet and your budget.

Knowing the different types of deductibles, how they impact your premiums, and what you should know to choose the right balance between cost and coverage is helpful.

How pet insurance deductibles work

A deductible in pet insurance functions much like it does in other types of coverage, like homeowners or auto insurance. It’s the amount you need to pay out of pocket before your insurance provider starts covering eligible veterinary expenses. Deductibles, along with co-pays, help insurers share the financial responsibility of vet bills with pet owners, which helps keep monthly premiums more affordable.

Typically, you’ll cover the entire vet bill up front and then file a claim for reimbursement. Any costs not covered by insurance, such as taxes or waste disposal fees, will be deducted along with your deductible. If applicable, you’ll also pay a copayment before the insurance company reimburses its portion.

Deductibles, copays and coinsurance

In addition to deductibles, pet insurance policies often include other out-of-pocket costs such as copays and coinsurance. Each contributes to your total cost when your pet needs medical care:

• Coinsurance: The percentage of veterinary expenses you’re responsible for paying after meeting your deductible.
• Copay: A fixed amount you pay for a specific veterinary service or visit at the time of care, regardless of the total cost of the service.
• Deductible: The amount you pay before your insurance starts covering costs.

Per-incident vs. annual deductibles

When choosing a pet insurance policy, you’ll come across two main types of deductibles: per-incident (or per-condition) and annual.

Annual deductibles

An annual deductible in pet insurance is a set amount you must pay out of pocket for covered veterinary expenses each policy year before your insurance provider begins to pay.

This type of deductible resets every year, regardless of the number or type of incidents or conditions treated. After you meet the annual deductible, the insurance covers all subsequent expenses according to your policy’s terms for the remainder of the plan year.

Let’s consider an example:

• Policy details:

  • Annual deductible: $500
  • Coinsurance: 20 percent
  • Coverage limit: $10,000 per year

• Veterinary expenses throughout the year:

  • January: $300 for a check-up and vaccinations
  • March: $600 for an ear infection treatment
  • July: $200 for a follow-up visit
  • Total expenses: $1,100

• Your out-of-pocket costs:

  • Deductible payment: $500 of expenses to meet the annual deductible.
  • Remaining amount after deductible: $1,100 (total expenses) – $500 (deductible) = $600
  • Coinsurance: You pay 20 percent of $600 ($120), and your insurance covers 80 percent of $600 ($480)
  • Total out-of-pocket cost for the year: $500 (deductible) + $120 (coinsurance) = $620

The insurance policy will then cover 80 percent of additional covered expenses for the rest of the plan year, up to the $10,000 limit. You will pay only the coinsurance portion.

Benefits of annual deductibles

Annual deductibles in pet insurance provide a clear and predictable way to manage veterinary expenses, especially for pets that might have multiple visits or treatments within a year.

Top advantages of annual deductibles include:

• Budgeting: It’s easier to budget for expenses annually, as you can predict the maximum out-of-pocket costs.
• Coverage for multiple incidents: Annual deductibles may benefit pets requiring frequent veterinary visits, as the deductible applies across all conditions and incidents once met for the year.
• Simplicity: Annual deductibles are straightforward, as you only need to meet the deductible once per year.

Per-incident deductibles

A per-incident deductible is an amount you must pay out of pocket for each separate illness or injury before your pet insurance coverage applies for that specific incident.

For instance, if your dog gets an ear infection in January and breaks a leg in July, you must pay the deductible for each incident separately.

Here’s an example of how it works:

• Policy details:

  • Per-incident deductible: $200
  • Coinsurance: 20 percent
  • Coverage limit: $5,000 per incident

• Medical incidents:

  • January: $1,000 for a broken leg
  • June: $500 for an ear infection

• Your out-of-pocket costs:

  • Deductible payment: $200 for each incident
  • Remaining amount: $1,500 – $400 = $1,100
  • Coinsurance applied: You pay 20 percent of $1,100 ($220), and your insurance covers 80 percent of $1,100 ($880)
  • Total out-of-pocket cost: $400 (deductible) + $220 (coinsurance) = $360

Your policy will apply similarly for any additional covered incidents — you pay $200, and your insurance pays 80 percent of the remaining cost up to the $5,000 per incident limit.

Benefits of per-incident deductibles

Per-incident deductibles offer a flexible and potentially cost-effective way to manage veterinary expenses, particularly for pets with infrequent but significant health issues.

The main benefits of this kind of deductible are:

• Lower initial costs: Often, per-incident deductibles are set lower than annual deductibles. This can reduce the initial out-of-pocket expense for a specific incident, providing financial relief when dealing with unexpected veterinary bills.
• Tailored coverage: This option benefits pets with rare, high-cost incidents, as you only pay the deductible when an incident occurs.

Keeping track of multiple deductibles for different incidents can be more complex and costly than an annual deductible. Carefully consider your pet’s health history and potential future medical needs.

Lifetime per-condition deductibles

A lifetime per-condition deductible is a specific type of pet insurance deductible that applies to each medical condition for the lifetime of your pet. Unlike annual or per-incident deductibles, which reset each year or for each incident, a lifetime per-condition deductible applies for the duration of a specific health issue.

When your pet is diagnosed with a particular condition, you pay the deductible for that condition once. After you meet the deductible, the insurance policy covers any future treatments or related expenses for that condition without requiring you to pay another deductible for the same issue.

Here’s an example:

• Policy details:

  • Lifetime per-condition deductible: $500
  • Coinsurance: 20 percent
  • Coverage limit: $10,000 per condition

• Medical condition:

  • Your veterinarian diagnoses your dog with diabetes, and the first treatment costs $1,000.
  • Deductible payment: $500
  • Remaining amount: $1,000 (total cost) – $500 (deductible) = $500
  • Coinsurance applied: You pay 20 percent of $500 ($100), and your insurance covers 80 percent of $500 ($400)
  • Total out-of-pocket cost for initial treatment: $500 (deductible) + $100 (coinsurance) = $600

For any subsequent treatments related to diabetes, you will only pay the coinsurance amount, as you’ve already met the deductible for that condition. You’d start over with a $500 deductible for any other conditions.

Benefits of lifetime per-condition deductibles

Lifetime per-condition deductibles ensure the insurance coverage remains consistent once you’ve satisfied the deductible. This consistency is especially beneficial for managing ongoing treatment plans and medication costs.

Other benefits include:

• Cost predictability: This option provides a clear understanding of the maximum out-of-pocket expense for any single condition over your pet’s lifetime.
• Financial relief for chronic conditions: Lifetime per-condition deductibles are particularly beneficial for pets with chronic conditions that require ongoing treatment.
• Simplified claims: It is easier to manage and predict costs for recurring conditions without worrying about annual deductible resets.

Lifetime per-condition deductibles can significantly reduce the financial burden of ongoing care, particularly for pets with chronic or recurring health issues. However, policies with lifetime per-condition deductibles may have higher premiums due to the insurer’s risk of long-term payouts for chronic conditions.

Average pet insurance deductibles

Pet insurance deductibles can vary widely based on the provider and the specifics of the policy.

Here are some general ranges from some popular insurance providers:

• Figo: Annual deductibles of $100 to $750
• Healthy Paws: Annual deductibles between $100 and $1,000
• Lemonade: Annual deductibles of $100 to $500
• Nationwide: Annual deductible options of $100 to $250
• Pets Best: Annual deductibles of $50 to $1,000
• Spot: Annual deductibles range from $100 to $1,000
• Trupanion: Ranges from $0 to $1,000 per condition

How to decide on your deductible

When insurers determine the cost of your monthly insurance premiums, deductibles are second only to the type of coverage you choose. Consider these factors when selecting an appropriate deductible for your furry friend’s insurance policy.

Consider your budget

Regardless of the pet insurance company and policy you choose, a higher deductible typically results in a lower premium. On the other hand, a lower deductible (less out-of-pocket expenses for initial vet visits) translates to higher premiums.

A higher deductible might be best if you prefer to pay less upfront and can manage higher out-of-pocket costs when faced with an emergency. However, if you want to minimize unexpected expenses, a lower deductible with a higher premium may be better.

Assess your pet’s health

If your pet is young and healthy, you might opt for a higher deductible, assuming fewer medical issues. However, a lower deductible could benefit senior pets or breeds prone to specific health conditions.

Evaluate the coverage

Make sure to understand what your policy covers. Some policies may have limitations or exclusions, impacting the cost-effectiveness of different deductible options.

The bottom line

Understanding pet insurance deductibles is key to choosing the right coverage for your pet and budget. Knowing how each type works can help you balance upfront costs with future savings, whether you are considering an annual, per-incident, or lifetime per-condition deductible.

Now that you have a clearer picture of how deductibles affect your pet insurance policy, the next step is to evaluate your budget, your pet’s health, and the coverage options available. Take the time to compare different plans and deductible levels to find the best fit for your financial situation and your pet’s needs. When you’re ready, reach out to the best pet insurance companies to get quotes and customize a plan that offers you optimal protection and peace of mind.

Frequently asked questions

• Which claims require pet insurance deductibles?

  Not every claim applies to your pet insurance deductible. Whether a claim counts toward your deductible depends on the type of deductible you have (annual, per-incident or lifetime per condition) and the specifics of your insurance policy.

  Most plans will not count the costs of routine care, such as vaccines and annual exams, toward your deductible. Similarly, expenses for elective procedures, pre-existing conditions and alternative therapies are also unlikely to chip away at your deductible.

• Are there pet insurance plans with no deductible?

  Yes, some pet insurance plans (like Trupanion or Trusted Pals) offer a $0 deductible, but they usually have higher monthly premiums. When considering such plans, it is essential to weigh the overall costs and benefits.

• Can I change my deductible amount after purchasing a policy?

  Most insurance companies allow you to adjust your deductible during the policy renewal period. However, changes may affect your premium and coverage. Check with your insurance provider for specific terms and conditions.

• What are diminishing deductibles?

  Diminishing deductibles, also known as vanishing or decreasing deductibles, are a feature offered by some pet insurance companies (like Embrace) to reward policyholders for not filing claims. With this feature, your deductible is reduced by a certain amount — usually a set dollar amount or a percentage — for each year you go without making a claim.

• What is the difference between a deductible and a reimbursement percentage?

  Both features affect your out-of-pocket costs when you file a pet insurance claim. The deductible is the amount you pay upfront, while the reimbursement percentage affects how much you will pay for covered expenses after meeting your deductible.