How do reimbursement rates and deductibles work?
Written by
Victoria Hayes
Reviewed by
Prof. Henry Webster, Ph.D.Reimbursement and deductible. The reimbursement level is the insurance company's promise of how much of the total bill, after your deductible, it will cover. The deductible is the amount you must pay out of pocket before your policy takes effect. Together, they help determine the amount of your premium and the level of protection you will have.
Reimbursement Rates
- Customizable between seventy and ninety percent
- Applied after deductible payment
- Higher rates increase premium costs
- Affects annual coverage limit utilization
Deductible Types
- Annual deductibles reset each policy year
- Per-condition deductibles apply once per illness
- Per-incident deductibles for accident-only plans
- Embedded versus non-embedded calculation methods
Calculation Sequence
- Deductible subtracted first in non-embedded policies
- Reimbursement rate applied before deductible in embedded
- Annual maximum limits final reimbursement amount
- Multi-pet discounts reduce overall deductible burden
The order of calculations is critical to your actual reimbursement amount. In non-embedded policies, you pay your deductible first and then receive a percentage of the remaining costs. Embedded policies apply the reimbursement rate first to the total bill and then subtract the deductible. This order of operations can greatly influence your out-of-pocket expenses.
The choice between an annual deductible and a per-condition deductible depends on your pet's specific health needs. If your pet has multiple unrelated issues every year, an annual is your best bet. If your pet has a chronic condition that requires ongoing treatment, a per-condition deductible may be more suitable. You only pay a deductible once "per category" of payment.
Premium costs vary based on the reimbursement and deductible options you choose. Generally, the higher the reimbursement percentage, the higher the premium (and vice versa); the higher the deductible, the lower your premium (and vice versa). Finding the right balance of premium cost versus out-of-pocket expense is a matter of determining what you are willing and able to absorb within your budget.
Evaluate your policy's financial structure on a regular basis to ensure it remains effective. Animals, like humans, continually change with age, and as they do, the financial requirements may change as well. You may want to consider increasing the reimbursement rates as your pet ages and becomes more in need of care, and also ensure the deductible amount aligns with your personal capacity for emergencies.
Read the full article: 10 Essential Pet Insurance Benefits Explained
