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A New Look at Pet Coverage

Saturday, June 16, 2012
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In the past, I haven't been the biggest fan of pet insurance. My skepticism stemmed from two concerns -- employees choosing pet insurance over important financial coverage, such as disability insurance, and the plan designs and premiums themselves.

Just recently, I decided it was time for me to update my knowledge.

Pet insurance has been around in varying forms since 1890, when Claes Virgin created the first health-insurance policy to protect his livestock. It took until 1982 for the first pet-insurance policy to be sold in the United States to television's Lassie by Veterinary Pet Insurance.

Dennis Drent, the president and CEO of VPI, says pet-insurance sales spiked after the late 1990s with the advent of the well-care rider, Internet sales and employers offering pet insurance.

In 2003, Chipotle Mexican Grill Inc. became the first employer to offer pet insurance as a voluntary benefit. From the start, the employer contributed toward the benefit. Today, Chipotle provides $10 per pet per month toward the premium for up to three pets. The benefit costs the employer about $4,000 annually.

"Chipotle is adamant that it will offer employees unique, edgy benefits," says Melissa Yoakam, Chipotle's Denver-based benefits manager.

Yoakam says that while a few workers complained about the $10 contribution for pets instead of dependents, the overwhelming response from employees was positive.

HR leaders should consider a few facts before adding pet insurance to their benefits offerings.

Pet insurance is not a variation of health insurance. It's a form of property insurance and, therefore, reimburses the pet owner after the pet has received care and the owner submits a claim.

Contracts vary widely in design and associated costs. Drent says "injury only" policies may cost as little as $10 per month, while premiums for rich plans may run about $200 per month. The average group pet-insurance policy runs about $30 a month.

Some carriers may issue policies on either a lifetime or annual basis. There are the usual issues that are associated with human healthcare policies such as pre-existing exclusions, deductibles, maximum limits and annual caps, and reimbursement calculations.

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Yoakam put my mind at ease regarding employees opting for pet insurance over other benefits. The workers who buy pet insurance, she says, also participate in long-term-care insurance and supplemental life plans at higher rates.

"Employees who choose pet insurance are more 'planful' and recognize the benefit of having their pet insured," Yoakam says.

Yoakam offers this advice to HR leaders considering such a benefit:

* If you're going to contribute funds to offset pet-insurance premiums, consider making a similar contribution to the dependent healthcare offering.

* Limit pet-insurance benefits to salaried employees.

HR executives may also want to consider whether employees should have to show evidence of health insurance before they're given access to ancillary benefits such as pet insurance. That would eliminate another of the reasons I am sometimes hesitant about such benefits.

My newly enhanced knowledge of pet insurance, though, does make me less of a skeptic.

Carol Harnett is a consultant, speaker and writer in the fields of employee benefits. She can be emailed at caharnett@aol.com.

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