Voluntary pet insurance on an upward trajectory
Employees with pets are happy employees — data shows that pet ownership reduces stress levels and the risk of heart attacks and lowers blood pressure and cholesterol levels — and employees who don’t have to worry about coming up with money to pay for their furry friends’ often-costly medical bills are happier still.
Hence the rise of the pet insurance benefit, which is steadily gaining ground on the voluntary menu. In 2016, premiums paid for pet insurance (sold both as a voluntary benefit and to individuals) rose 21%, according to the North American Pet Insurance Association. The trade group also calculates that the number of pets insured in North America grew by 11.5% last year.
One factor behind the growth seems to be deferred childbearing by millennial generation employees, and the increasing number of “empty nesters” who substitute pets for human children.
“Our employees are not shy about asking us about things they want us to offer,” says Christine Buczek, director of benefits for Indiana University Health, an Indianapolis-based medical organization with some 30,000 employees distributed among 15 hospital systems. Pet insurance is one of those “things they want” and has been on IU Health’s menu since it was first offered in 2009.
Better than human insurance?
One of IU Health’s employees says that her pet insurance plan picked up most of the $14,000 tab when her dog sustained critical injuries after being run over by a tractor. “Compared to dealing with human insurance, I found it pretty pleasant,” intensive care nurse Jessica Parson says.
At cloud computing solution provider VMware, pet insurance is a “natural fit” within a wide variety of voluntary benefits, according to Rich Lang, the company’s senior vice president of HR. “Offering pet insurance helps us stay competitive in the marketplace and attract and retain workers,” he says.
He also believes pet insurance can give the employees who purchase it a productivity boost. “A healthy pet equals a happy employee,” he says.
Data gathered by pet insurer Healthy Paws from the Human Animal Bond Research Institute supports that assertion. “Workplace wellness is a big concern for many employers and there is a growing body of evidence that people with pets” enjoy multiple health, according to Rob Jackson, CEO of Healthy Paws.
Pet insurance carriers generally offer two levels of protection: Coverage for accident and illness only, or a plan that covers those circumstances plus “wellness” services including vaccinations, spaying/neutering and tooth cleaning.
There are no Affordable Care Act-like laws banning pet insurers from inserting preexisting condition exclusions in their policies. In fact, all pet insurance carriers do exclude them.
At IU Health, whose voluntary platform features pet insurance from Nationwide, employees pay around $18 per biweekly paycheck for the more basic insurance package, and $31 for the plan that includes wellness. There is a $250 deductible, and the insurance company pays 90% of covered services.
As is typically the case with other voluntary offerings, a company’s benefits department has minimal involvement with the administrative aspects of providing pet coverage. Employees typically enroll online, and pet insurers often coordinate with payroll platforms for the payroll-deducted premium payment. (Some pet insurers bypass payroll altogether and direct-bill employees, however.)
Employees can, of course, buy pet insurance on their own. But from the worker’s perspective, there are several advantages of doing it via their employer, according to Scott Liles, Nationwide Insurance’s “chief pet officer.”
For starters, as with other voluntary products, the group platform enables them to gain a price advantage because marketing costs are amortized over a larger insured population base, Liles says.
In addition, with at least one carrier — Nationwide — employees can enjoy premium stability. In the individual market and with some pet insurance carriers, pet insurance premiums can rise as the pet ages.
Premiums for pet insurance with Healthy Paws can vary by ZIP code, animal breed and age, according to Rob Jackson, the company’s CEO. Those underwriting variables mean that monthly premiums for the company’s policies can begin at $15 for feline coverage and $25 for dogs. (Apples-to-apples comparisons of different companies’ premium structures require careful reading of policy provisions.)
Uptake rates for pet insurance on the voluntary platform don’t appear to be a hot issue for employers. “We focus on providing good benefits at a good price,” rather than the number of employees who purchase any particular benefit, says IU Health’s Buczek.
“We did not have expectations with enrollment numbers,” adds VMware’s Lang. His primary concern, as is Buczek’s, is employee feedback. As long as the employees who purchase the benefit are happy with it, the size of the enrollment is of little consequence.
From the carrier perspective, it doesn’t appear to take many enrollees to justify inclusion on an employer’s voluntary platform. “We don’t necessarily have any pre-set minimums, and I haven’t heard of any employers not putting in pet insurance because of low uptake,” Liles says.
Despite the recent rapid growth of pet insurance, there’s plenty of room for growth. Only around 2% of pets are covered by pet insurance, according to Liles. In the United Kingdom, the proportion is 10 times that amount, he adds.
If buzz is an indicator, pet insurance will continue to become more common in the U.S. “We’ve seen more requests for information about it,” Buczek says. “It’s probably because the cost of taking care of your pet has gone up.”