Did I get a raw deal from my pet insurance company?

Question:

Previously I had pet insurance and had a bad experience where they paid less than half of what my veterinarian charged.  I felt the charges were appropriate given the seriousness of my dog’s illness.  Did my vet charge too much? Or was the pet insurance not worth it?

Answer:

You had a plan that paid your pet’s veterinary care based on either a Benefit Schedule or Usual & Customary Schedule, which has set fees for diagnostic tests, procedures, and by diagnosis (accident/illness). These types of plans may not allow adequately for severity, complications or medical judgment on care. They simply allow a set amount, such as a broken bone is $XX, period. They do not pay based on your veterinarian’s cost.

What you need is a plan that pays a set percentage of your actual cost. For instance, I like 80:20 plans because you always know that you will only pay 20% of the cost after the deductible you choose. The insurance will pay the 80% of actual charges (up to any maximums), not some predetermined set benefit schedule which may be out of alignment with your veterinarian’s charges or the severity of the injury or illness.

Why 80:20 when there are other options? It is up to you; my approach is that you want to balance what the insurance pays and what you contribute to the cost in order to keep cost lower. The higher the deductibles or co-payments then the lower the premium should be. There is nothing wrong with low deductibles and little or no co-payment, only that your cost will be higher if you have little or no incentive to keep the cost down. The main thing to consider is that you pick a plan that pays a flat percentage of your cost, not some set schedule.