Pet Insurance for Veterinary Staff

Embrace is fortunate to connect with many veterinary hospitals from one end of the country to the other. One concern we hear a lot relates to the cost of providing free or heavily subsidized care to the pets of veterinary staff.

The Downside of Subsidized Care

Subsidized care has a negative impact on a veterinary clinic's revenue although there can be wide fluctuation from year to year. There is also the lingering question relating to the tax implications. IRS Publication 15-B The Employer's Guide to Fringe Benefits states:

Exclusion from wages. You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits.

  • For a discount on services, 20% of the price you charge nonemployee customers for the service.
  • For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property.

Dropping your staff discount down to 20% would seem to be in the spirit of the IRS guidelines but we have found many hospitals offering 50% to 80% discounts on care. Only a tax professional can tell you if this is in compliance with IRS guidelines or not.

In other situations the veterinarian's time is given free and the staff member pays only for what is consumed. This too requires interpretation by a qualified tax professional.

But no matter which way you look at it, subsidized care for staff costs your clinic real revenue and is volatile from year to year and very hard to budget for.

Can Pet Insurance Help?

Some progressive hospitals have been offering pet insurance as a staff benefit. More than anything else pet insurance as a staff benefit smooths out the year-to-year volatility and imparts a strong measure of predictability into the management of your practice.

If your hospital purchases pet insurance on behalf of staff then this expense may be tax deductible to the business. However the staff member would still have to pay personal income tax at their marginal rate on the benefit because pet insurance is not a tax-free benefit under law.

Pet insurance is not a panacea unfortunately. There are still some areas where pet insurance can't help your staff:

  • Pre-existing conditions
  • Pets that are too old to begin coverage
  • Pets that are not cats or dogs

Our experience has been that around 65 to 75% of staff pets are eligible for a pet insurance plan that will cover their pets.

Embrace Can Help

We have experience putting together packages and advising veterinary hospitals on pet insurance as a staff benefit. We can help you pick the right kind of plan and give you a quote from Embrace that incorporates our 20% discount to veterinary staff.

To learn more contact our veterinary specialist team at Embrace at (800) 340-3058 or e-mail us at