How Your Pet Insurance Refund is Calculated

Your pet insurer is only as good as its claim reimbursements.

A gray cat cautiously stepping out of its carrier, curiously batting at a stack of papers being filled out by a veterinarian for its pet insurance claim reimbursement.

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

An image of a portion of Nationwide’s Major Medical benefit schedule which was screenshotted in May 2019 and is focusing on the Cardiovascular System.

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)*

Pet insurance reimbursement calculation example showing a $1,200 actual vet bill, minus a $200 annual deductible and $200 copay, resulting in an $800 reimbursement amount with an 80% reimbursement percentage.

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.

Pet insurance reimbursement calculation example showing a $1,200 actual vet bill, minus a $240 copay and $200 remaining deductible, resulting in an $760 reimbursement amount with an 80% reimbursement percentage.

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.