Alternatives to Pet Insurance
Many people suggest that instead of buying pet insurance you could set aside money in a savings account or use a dedicated credit card just for veterinary bills. There are a number of alternatives that you can weigh up against the purchase of pet insurance.
We're going to examine four alternatives to pet insurance that we find pet parents talking about a lot.
- Dedicated savings account
- Dedicated credit card
- Pet discount programs
- Care Credit
Of course, you can just do nothing and bear the financial burden of unexpected vet bills when they happen but given you are reading this page, we think you want to do something about managing unexpected veterinary bills.
Alternative #1 - A Dedicated Savings Account
It's always smart to have savings on tap for life's little emergencies. But if you plan to draw on savings to prepare for an unexpected trip to the veterinarian, how do you know when you’ve got enough saved up? Veterinary care is expensive these days and bills of $2,000 or $3,000 are fairly common, especially in metro areas.
If you put aside $35 at the start of every month in an account that pays 4% interest (compounded monthly) it will takes you a little over 6 years to save $3,000, which would be enough to cover a serious illness or injury. But your pet isn't going to wait to get sick until your savings account has enough in it! And if your pet develops a chronic condition then your savings could be depleted much more quickly.
Saving a little every month does make sense to help pay for routine care because you already know roughly how much money you'll need for your pet's regular checkup and any other vaccinations, deworming, and so on.
Alternative #2 - A Dedicated Credit Card
Let's use our previous veterinary bill of $3,000 and assume that you have a special credit card set aside especially to pay for it. Let's assume your credit card company charges 18% interest on unpaid balances.
There are a number of gotchas when using a dedicated credit card:
- The balance shows up on your credit report
- The interest rate can be very high, and higher still if you miss a payment
- There are heavy financial penalties for the slightest slip in repayment
In order to pay the credit card off completely in 3 years you will need to pay $108 per month. In total you'll be repaying the $3,000 you paid for your pet's veterinary care plus another $750 in interest.
However for smaller veterinary bills of $400 to $800 a credit card can be a viable pet insurance alternative.
Alternative #3 - Pet Discount Programs
There are a number of pet discount programs and all of them offer a discount, usually around 25%, on all veterinary services and supplies from participating veterinary clinics and hospitals.
One important thing to understand is that a pet discount program is not pet insurance or even insurance at all, it's a form of membership into a discount club.
Pet discount programs have a number of pros:
- They are affordable
- There are no exclusions or pre-existing conditions
- There is no waiting period
- They usually apply to all veterinary goods and services
- They cover routine care and genetic illnesses
Pet discount programs also have two big weaknesses. The first is that you are limited to using veterinary hospitals and clinics that accept the discount card. If you visit any "out of network" veterinary clinic then you do not receive any discount.
The second is that even a 25% savings could still land you with a hefty bill. For example, a veterinary bill of $2,000 would still leave you responsible for finding $1,500 after the 25% discount was applied. A pet insurance policy with a $100 deductible and a 20% co-pay would leave you responsible for only $500 of the $2,000 - one-third of the alternative.
Why would you want to go out of network if you had a pet discount program? You might have to if your pet needed treatment at an emergency veterinary hospital or if you are referred to a veterinary specialist clinic that does not participate in the program. And that’s much more likely to happen for significant health issues that cost a lot of money, just when you need the discount the most.
We don't believe that pet discount programs are a suitable pet insurance alternative but, together, they make a good combination. Pet discount programs are best at helping to take the sting out of your pet's routine care costs.
Alternative #4 - Care Credit
Care Credit is a flexible payment plan for veterinary expenses that behaves like a credit card but with some nice extras. The rates are generally but not always better than many credit cards.
Care Credit has a number of pros:
- It can have a better interest rate than a credit card
- It is designed specifically for medical expenses
- If you pay it back within 18 months there is no interest
Care Credit also has a number of cons:
- Your veterinarian has to accept Care Credit for payment
- You must apply for Care Credit just like applying for a credit card
- Not all veterinarians accept every Care Credit plan
- Care Credit shows up on your credit report
Care Credit is an alternative to pet insurance for those pet parents who can make best use of the interest-free payment plan and whose pets don't suffer from any sort of chronic condition. But if you want your pet protected against chronic conditions or treatments costing more than $2,000 or $3,000 then pet insurance helps you in a way that no credit card or savings plan can.