Pet Insurance Benefit Schedules
Some pet insurance plans determine the amount of your claim refund using a benefit schedule. In some cases you might get back much less than you expect.
What Is A Benefit Schedule Exactly?
The image below is an example from the superior benefit schedule of one of the leading pet insurance companies, VPI. The first column of the benefit schedule lists the diagnosis for your claim and the dollar figures in the columns to the right are the specific reimbursement amounts for that diagnosis.
Actual Benefit Schedule Excerpt for a Diagnosis of Cardiomyopathy
In the example above, the total amount that you could be reimbursed for a primary diagnosis of cardiomyopathy is the sum of $216 plus $315, a total of $531. Now we'll look at the pros & cons of benefit schedules.
Pro #1: Easy to Disclose
Benefit schedules are easy to consolidate into a single document that can be attached to a policy and posted on a website. This compares favorably to another method used in pet insurance, the Usual Customary and Reasonable approach, where payouts vary by location and are harder to disclose.
Pro #2: Easy to Apply to Claims
If the benefit allowances are clearly laid out up front, pet parents can review the benefit schedule and see what their maximum payout will be for the year before they pay for expensive treatment. It can be harder to determine the coverage amounts if there are multiple diagnoses or no clear diagnoses, which happens more frequently than you might think.
Pro #3: Premiums May Be Lower
While some of the limitations of a benefit schedule reduce the claim payout (see the cons below), lower reimbursements are generally reflected in lower pet insurance premiums than other policies that do not use benefit schedules. If you understand and accept the impact of the specific benefit schedule on your future claims payouts, lower premiums can be appealing.
Con #1: Not Indexed to Inflation
If not updated frequently then the amounts shown in the benefit schedule can fall below current veterinary fees. According to the Bureau of Labor Statistics the average rate of veterinary inflation in metropolitan areas is around 6 - 7% per year. So if a procedure costs $1,000 this year then, on average, it will cost around $1,060 next year, then $1,124 the year after, and so on.
If the benefit schedule is not updated frequently, the gap between the cost of the actual procedure and the benefit schedule reimbursement grows over time. This means you get a smaller and smaller percentage of each vet bill the longer it has been since an update.
Con #2: Specialist and Emergency Vet Fees
Specialist veterinary practices can cost a lot more than regular ones. In the example above for cardiomyopathy, the benefit schedule will reimburse up to $531. But what if diagnosing and treating the cardiomyopathy cost $1,500?
In this scenario you would not get back more than $531 and you would have to pay 100% of any amount above the benefit schedule allowance, which amounts to $1,500 - $531 = $969 in this case.
Con #3: Does Not Vary By Location
Veterinary costs typically vary a great deal depending on the location of the veterinary hospital. For example, according to a recent phone survey we did, a cruciate ligament repair in Williamsville, NY, costs about $2,600 versus $4,600 at a specialist clinic in Manhattan, NY. The current pet insurance benefit schedules do not vary by location meaning that one cost applies to all locations across the US.
If the benefit schedule does not reflect geographic differences, the gap between the cost of the actual procedure and the benefit schedule reimbursement can be unexpectedly large if you did not check your benefit schedule in advance of paying for your treatment.
So, do the pros outweigh the cons? Depending on where you live and what kind of medical care you expect to give your pet should a future health concern happen, a benefit schedule might work for you; however, you need to fully understand the limitations when it comes to claim reimbursement time to avoid disappointment at a time when you are financially out of pocket.
In large part, other types of insurance have moved away from benefit schedules.