For the past couple of weeks, we have looked at several terms you need to be familiar with and the part they play in determining how much reimbursement you receive from the pet insurance company.
First, we looked at lifetime, annual, and per-incident maximums. Last week, we looked at annual vs. per-incident deductibles. This week, we’ll look at the coinsurance percentage.
I realized as I was writing this post that what I’ve always called "copay," as it pertains to pet insurance, is nowadays mostly referred to as "coinsurance."
In human health insurance policies the copay is a flat fee you pay out-of-pocket (e.g., $20 for an office visit or $100 for an emergency room visit). Using this definition, pet insurance policies don’t have a true copay like human health insurance policies. So, in the future, I’ll try to use the term co-insurance.
Hopefully, you aren’t thoroughly confused by now!
Coinsurance is the percentage of the total bill after the deductible that the pet owner is responsible for. This will usually range from 0-40 percent. If a pet insurance company advertizes that they pay 80 percent of the bill after the deductible, it means that the coinsurance, or the amount you pay, is 20 percent of the bill. Some companies will subtract the coinsurance before subtracting the deductible.
Notice the difference the coinsurance percentage can make in how much you have to pay out-of-pocket.
As you can see in the illustration above, the coinsurance percentage is something that you want to keep low, since it varies depending on the size of the claim. In contrast, the deductible is a fixed, known amount regardless of the total bill. As with deductibles, the lower the coinsurance, the higher the premium will be.
I went to the websites of two of the companies that allow you to select your own deductible and coinsurance and obtained a quote. I learned that the deductible had a bigger impact on the premium than did the coinsurance percentage. I could readily see the impact that each possible deductible and coinsurance combination had on the premium when obtaining a quote. Therefore, if you need a lower premium, it is generally wiser to select a higher deductible (especially if it is an annual deductible) and a lower coinsurance percentage.
For the last three weeks, we have looked at annual and per-incident maximums, annual and per-incident deductibles, and coinsurance percentages in isolation and their impact on your out-of-pocket expenses. However, you should also include the premium in the mix to get a truly accurate calculation of your total out-of-pocket expense.
In a future post, I’ll show you how to evaluate a company’s policies to determine which one is the best buy when taking all these variables into account — including the premium. Sometimes the result will surprise you.
Dr. Doug Kenney