Pet insurance can significantly reduce the financial hit of unexpected vet bills, but to get the most out of your coverage, you need to understand how reimbursement works. The reimbursement method determines how much vet bills you’ll be reimbursed for, and it varies depending on your policy.
If you don’t clearly understand the details of your policy, you could find yourself facing unexpected out-of-pocket expenses. Having a good understanding of how pet insurance works, including the reimbursement process and all that entails, can help you avoid frustration and disappointment.
How pet insurance reimbursements work
Pet insurance reimbursement is a model in which pet owners pay for veterinary care up front and then submit a claim to the insurance company to be reimbursed for a portion of those costs. This system offers a number of benefits, including the freedom to choose licensed veterinarians, specialists, and emergency clinics.
Unlike human health insurance, which often limits patients to a specific network of providers, pet health insurance is more flexible. However, with this flexibility comes the responsibility of managing upfront payments and navigating the reimbursement process.
Why Pet Insurance Uses a Reimbursement Model
There are several reasons why most of the best pet insurance companies use the reimbursement model.
- Reduce your bill: The reimbursement model transfers some of the financial responsibility to the pet owner. If pet owners have to pay out of pocket before receiving reimbursement, they are more likely to consider whether treatment is necessary, reducing the number of claims that insurance companies have to process.
- Flexibility: One of the main reasons is that it offers flexibility to pet owners, which is crucial during emergencies when getting to the nearest vet is more important than knowing if they’re in-network.
- Reducing financial risk for insurance companies: By having pet owners pay for veterinary services up front, insurance companies minimize the risk of overpayment or fraud.
- Simple claims processThis model also simplifies the claims process, as the insurer only needs to review the submitted claim and compare it with the policyholder’s coverage limits and terms.
General refund methods
Just as there are three types of pet insurance, there are also three main reimbursement methods commonly used by pet health insurance companies: Understanding the pros and cons of each can help you determine which reimbursement method best suits your financial situation and your pet’s health care needs.
Percentage-based refunds
This is the most common reimbursement method. In this model, the insurance company reimburses a percentage of the total veterinary care bill after you meet your deductible (usually 70-90 percent).
For example, if your insurance covers 80 percent of your veterinary expenses, you’ve already paid your deductible, and your bill is $1,000, you’ll be reimbursed $800.This method is popular among pet owners because it’s easy to understand.
Strong Points
- This is common to most pet insurance policies.
- It offers a balance between coverage and cost.
- It’s predictable and easy to calculate.
Cons
- The out-of-pocket costs can be substantial, especially if veterinary care is expensive.
- Pet owners may still have to cover a significant portion of the costs.
Payment Schedule
Some insurers use benefit schedules that set fixed reimbursement amounts for certain conditions or treatments, regardless of actual cost.
For example, if your insurance benefit schedule allocates $500 for a particular procedure, but the procedure costs $700, you will only be reimbursed $500. This method gives you clarity on how much you will be reimbursed, but it can result in higher out-of-pocket costs if your actual costs exceed the scheduled benefit amount.
Strong Points
- If vet bills fit into your schedule, it can be cost-effective.
- A clear, predefined reimbursement amount for a particular treatment.
- This will make it easier to understand what you are being refunded for.
Cons
- If the actual cost exceeds the estimated benefit amount, you may be required to pay a large amount out of pocket.
- More expensive or specialized treatments may not be covered entirely.
Actual expenses reimbursed
This option, less common but still offered by some insurance companies, will reimburse you for the full cost of treatment, minus any copayments and deductibles, if your insurance covers the treatment. This option offers the highest level of coverage, but often comes at a higher premium.
For example, if your pet has a $2,000 surgery and your deductible is $200 and your copayment is 10 percent, your out-of-pocket payment will be $400 and the remaining $1,600 will be reimbursed by your insurance company.
Strong Points
- Ideal for expensive medical treatments and surgeries.
- Provides the highest level of coverage.
- It may cover the full cost of treatment, minus your deductible and copayments.
Cons
- The premiums are higher than other reimbursement methods.
- There is limited coverage available among pet insurance companies.
How to Manage Pet Insurance Refunds
Handling the refund process effectively requires careful planning and attention to detail.
1. Understand the policies
The first step in managing your reimbursements is to thoroughly understand your insurance, which includes knowing your deductibles, copayments and reimbursement rates.
Be sure to understand any exclusions and limitations in your policy, including any breed-specific or pre-existing conditions that may affect reimbursement.
2. Keep detailed records
Accurate record-keeping is important for the reimbursement process. Keep copies of all veterinary bills, receipts and related documentation. You will need to provide these records to your insurance company when you submit a claim. You may also need them if you are disputing a denied claim.
3. Consider payment plans
If your veterinarian offers installment plans, consider using them to pay for larger veterinary bills. Installment plans can help you manage the cost of expensive procedures until your reimbursement is processed. However, make sure the terms of the installment plan don’t include expensive additional fees or interest charges.
4. Have an emergency fund
An emergency fund dedicated to your pet’s medical expenses can be a lifesaver. This fund will cover veterinary costs while you wait for reimbursement and ensure your pet gets the care they need, when they need it.
5. File your claim promptly
To avoid delays in reimbursement, submit your claim as soon as possible after veterinary treatment, and many insurance companies offer online portals or mobile apps that make the claim process quick and easy.
6. Contact your insurance company
If you have any questions or concerns about your coverage or a specific claim, please contact your insurer or broker. Clear communication will prevent misunderstandings and ensure you receive the compensation you are entitled to.
Additional tips for managing costs
In addition to the strategies above, here are some additional tips for managing pet medical costs based on your reimbursement model:
- Request a pre-treatment quote: Before agreeing to undergo any costly procedures, ask your vet for a detailed estimate of costs, so you can budget and avoid any surprises when it comes time to pay the bill.
- Consider direct vet payment options: Some pet insurance companies offer a direct vet payment option where the insurer pays the vet directly, reducing upfront costs. Check with your insurance company to see if this option is available and if your vet will accept it.
- Price Negotiation: In some cases, veterinarians may be willing to negotiate their fees, especially if the procedure involves expensive procedures, so it never hurts to ask if there is any flexibility in pricing, especially if you’re a long-term customer.
- Find a veterinarian: Veterinary costs vary widely from clinic to clinic, so don’t be afraid to shop around for a veterinarian who offers quality care at a reasonable price, but make sure the veterinarian you choose is licensed and meets the requirements of your insurance company.
Conclusion
Understanding how pet insurance reimbursement methods work can help you manage vet expenses and have some control over the financial impact of a claim. Familiarizing yourself with the details of your policy and the different reimbursement models can help you make an informed decision and minimize your out-of-pocket expenses.
Knowing the details of your policy will help you manage your financial expectations when it comes to making a claim. Make sure you research it so you know what your policy does and doesn’t cover, and what you’re entitled to in terms of compensation.
