Methods of Calculating Claim Reimbursements
There are three common ways that pet insurers process claim reimbursements for vet bills:
Based on a benefit schedule
Subtracting deductible then copay from the charged amount
Subtracting copay then deductible from the charged amount
The Benefit Schedule Reimbursement Method
A benefit schedule is a list of diagnoses with the maximum amount that a pet insurance plan will pay if your pet requires treatment for that diagnosis. Any costs that exceed the amount outlined in the benefit schedule is paid out of pocket.
In large metropolitan areas, the benefit schedule payout can be much less than the actual treatment cost. As a result, you may be left paying a large portion of the bill yourself even though you have pet insurance.
*Picture of a portion of Nationwide’s Major Medical benefit schedule (screenshot captured in May 2019)*
The "Deductible then Copay" Reimbursement Method
This falls under the umbrella of a direct reimbursement method, which means that the allowable (or covered) charges are what is considered for reimbursement (i.e. not a benefit schedule dictating a maximum allowed). The deductible is subtracted from the total covered charges, then your copay is subtracted from the smaller remaining amount. This method gives you the most back on vet bills and is the method that Embrace Pet Insurance uses.
Each company considers coverage a little differently, but as an example, let’s say that you have an Embrace policy with a $200 annual deductible and an 80% reimbursement percentage. Your dog gets sick and the total covered veterinary bill comes to $1,200. Embrace would subtract your $200 annual deductible first, and then reimburse you 80% of the remaining $1,000. Your total reimbursement for that example claim would be $800.
The “Copay then Deductible” Reimbursement Method
This method also falls under the direct reimbursement method umbrella but gives back less than the “deductible then copay” method. For this reimbursement method, the pet insurance company will subtract your copay from the entire covered charges, then take the deductible from the smaller amount.
Let’s take a look at the example above, but this time it’s a “copay then deductible” reimbursement method. You have a $200 annual deductible and an 80% reimbursement percentage and receive a vet bill for your dog of $1,200. First, your 80% reimbursement is factored, leaving you with $960. Then the $200 deductible is taken and your total reimbursement is $760.
The difference between the “deductible then copay” versus “copay then deductible” method in this example is $40, but as vet bills get costlier, that difference becomes much more.