At a time when employers are scaling back on costly health benefits, pet insurance is gaining popularity as an employee benefit.
Veterinary Pet Insurance, the nation’s largest pet insurer, saw its corporate accounts balloon from 15 to 1,600 in the past six years. About 15 percent of Veterinary Pet Insurance’s policies, or about 50,000, now come from its corporate accounts.
The growth of this perk comes as pets occupy an increasingly prominent place in the American home. According to the American Pet Products Manufacturers Association, pet owners spent an estimated $9.8 billion on veterinary care in 2007, up from $7.1 billion in 2001.
Pet owners are spending more on sophisticated care to give animals some comfort or a few extra years when illness strikes. The cost of a surgical veterinarian visit was $453 for dogs and $363 for cats in 2006, the most recent figures available, but treating a pet for an illness like cancer can cost several thousands of dollars.
Insured pets still rare
Pet insurance is still relatively rare, with only about 2 percent of pets in the United States insured. Another major pet insurer, PetHealth Inc., expects that figure to grow to about 10 percent over the next decade as options for animal medical care grow. PetHealth, based in Oakville, Ontario, saw revenue from all policies jump to $4.3 million in the third quarter, up 12 percent from the previous year. While corporate accounts are growing, the vast majority of policies are still signed up through veterinary offices.
Noninvasive procedures like MRIs, CAT-scans and endoscopies have become relatively common for animals, with many pet owners looking to screen for illness early on. Though rare, owners can now even get organ transplants and pacemaker surgeries for cats and dogs.
“Veterinary science has grown in leaps and bounds. Treatments and therapies that were not available are now available,” said John Warden, vice president of insurance at PetHealth. “There’s an alternative to euthanasia, but it costs money. That’s immediately led to the issue of insurance.”
For employers, offering pet insurance doesn’t cost a dime, since employees pay the full cost of the benefit, unlike health insurance for humans, where employers typically shoulder most of the cost. Workers typically get a discount of 5 or 10 percent if pet policies are obtained through their company.
Only a tiny fraction of employees typically sign up for the benefit — usually less than 5 percent, according to Veterinary Pet Insurance. But with big names like Comcast Corp., Home Depot, the Walt Disney Co. and Sprint offering the benefit, policies add up.
“It’s really taking a very holistic view of employees,” said Patty Friedman, a senior health care strategy consultant for Watson Wyatt Worldwide, a personnel consulting firm. “It falls under the whole umbrella of protecting your financial well-being for you. (Employers) want to make things easy so you have one less thing to worry about.”
Voluntary benefits like pet insurance are becoming more common at a time when American workers are feeling the sting of scaled back health benefits for people. According to the Kaiser Foundation, premiums for family coverage have increased 78 percent between 2001 and 2007 and companies that offered health benefits dropped to 60 percent of employers in 2007 from 69 percent in 2000.
For most companies, pet insurance is simply a way to help employees at no cost to the bottom line.
Treating pets like part of the family
Del Monte Foods Co., based in San Francisco, started offering pet insurance a little over a year ago. Only about 15 or 20 employees have signed up for it so far, but the benefit makes a statement about the company’s greater corporate culture, said Paul Berg, Del Monte’s vice president of compensation and benefits.
“Nobody’s going to leave or stay because of it. But it shows we understand that pets are just a very, very important part of the family,” Berg said.
The company’s rollout of pet products in recent years also made it a natural fit, Berg said.
Bobbie Stanton, a 55-year-old employee at Del Monte, signed up her two Shetland sheepdogs right away.
Having had to pay to treat her previous dog’s mouth cancer, she knew the financial toll an illness could take. She had to borrow $3,000 from her parents to have the tumors removed.
“The alternative was to let him die, and I couldn’t do that,” she said.
Stanton now pays $313 a year for each of her two dogs. She recently paid $20 to have a burr removed from one dog’s ear; the cost without insurance would have been $200.
Depending on the age and type of animal, costs for pet insurance typically range between $10 and $40 a month. Pet owners typically pay up front for vet bills then are reimbursed by insurers.
Pet insurance isn’t for everyone, however. Unless your pet’s breed is prone to chronic illness, Consumer Reports says pet insurance might cost more than it saves.
The consumer group warns that necessary treatments may not be covered and that policy holders might bump up against lifetime payment ceilings for chronically ill pets. Some policies might limit how much they pay per incident and others might require higher copays as pets age.
Whatever the means may be — pet insurance, a savings account or any other financial plan — the key is to simply plan ahead for medical care as with any other member of the family, said Dr. Thomas Carpenter, president of the American Animal Hospital Association.
“That way you won’t have to make difficult decision in times of duress,” he said.