With 2021 right around the corner, many people are taking this time to budget for the new year. COVID has brought massive change to all of our lives (and our pockets!). If you have a pet or are considering getting a pet, it’s important to understand the general costs and expenses. In fact, Doggypedia reports that the average cost of owning a dog is roughly $14k. Healthcare is a big part of the overall cost of owning a pet, and pet insurance is a great option to consider, but may not always be the best fit for you and your family.
Pet adoption and ownership rates are skyrocketing as people across the country are finding themselves now working from home. The need for companionship and the time to housebreak a new furry friend has become an opportunity of convenience. It has never been easier to foster and grow that furr-ever relationship as restrictions to work, travel, and life have led to newfound time and availability.
As a member of the rescue community, a dog foster dad, and the owner of several fur-babies I tend to be funneled all of the pet related questions from friends and family. One question I seem to be asked a bit is, “Do I need Pet Insurance?”. So I started doing my research.
The NY Times reported on June 7th 2017 that only 1-2% of the entire dog/cat ownership have pet insurance of a population of nearly 184 million. That grew significantly in 2018 as Today’s Veterinary Business reported a growth of 18% on insured cats and dogs. These statistics are relevant that even before COVID-19 the pet insurance industry was on a strong growth trend. Pet Life Today reported on 11/10/2020 that now 68% of all-American households own at least one pet.
So, how can you maintain that your pet will have the necessary care needed when the times come and the bills start to roll in?
Pet Insurance
According to North American Pet Health Insurance Association (NAPHIA) there are 12 major pet insurance companies in North America. Picking and choosing a pet insurance is difficult. Unfortunately, there is no “number 1 go-to choice” and research is necessary to figure out what is the best option. The key driver to pet insurance are the premium, deductible, annual limit, and reimbursement percentage. All of these variables indicate that an owner will still have a cost.
Also, some breeds have restrictions from coverages and pet health insurance coverage may not pay the full amount if the costs incurred are found to be above the average costs of the procedures. The due diligence is necessary and there are several great resources available to get the high-level break down of pet insurance options. Money.com breaks down the Best Pet Insurance Companies of 2020 in this article link for new pet owners.
Health Maintenance Plans
Preventive care coverage can be an alternative for those unable to afford pet insurance or can be a great supplemental to high deductible and low premium pet insurance plans. The value to a health maintenance plan is a strong motivating tool to make those wellness appointments for the fur-babies. Good preventive care can help identify underlying issues early and potentially lead to reduced costs associated with treatments and emergency medical costs.
Pet Insurance companies may offer health wellness plans as stand-alone or supplemental options to pet insurance but, check with local veterinary services for options as well. Companies like Banfield Pet Hospital offer service plans with unlimited office visits, early screenings for serious illnesses, and discounts on other products and services.
Pet Savings Account / Veterinary Financing
Another alternative is a self-funded approach. In general, the cost of pet ownership is grossly underestimated. In the sections above only health care is considered in the costs but other cost should be considered for food, toys, grooming, etc. Thrillist.com reported that owning a dog costs on average $153 per month. Maintaining a separate bank account for pets and contributing as close to this monthly cost as possible can be a very cost-effective solution but requires discipline. Using the account only for pet expenses should see it growth initially month over month as the pet ages. In latter years, the additional funds collected would allow for payment of higher health care costs. Pet insurance and preventive maintenance plans are a reality because pools of customers share costs but, in the end, the companies still turn a profit.
In the event a self-funded option is the best fit, I recommend coupling the Pet Savings Account with Veterinary Financing. Options like CareCredit offer piece of mind alternatives to have the flexibility to cover unexpected and emergency cost situations. In the event that the Pet Savings Account has not accrued enough funds over times to cover costs, Veterinary Financing options can cover the price gap and offer a month over month payment plan for the needed care costs.
In the end the option chosen should best fit your financial situation and ability to care for a pet. In the future I plan to pursue the Health Savings Account option as I am financially stable enough to afford a self-funded option and have good enough credit to apply for a Veterinary Financing card or to utilize an alternative low interest credit card solely for the purpose of pet care.
My Personal Experience
Presently, with my eleven-year-old adopted Papillion, I use a Health Maintenance Plan with Banfield Pet Hospital. Across my market, Banfield is more expensive on average but with the maintenance plan and the discounts I have saved me money each year compared to alternative options. As he has aged, I have found myself taking more trips to the vet and the savings on those waived trip fees add up over time. I am not afraid to take him in early when I feel something is wrong because of the free visits. lso, the preventive care has helped identify several issues I was able to catch early, and the costs associated to the potential prolonged results has likely saved me quite a bit in expenses.
-Michael Smith