Pet Health Savings Accounts

While doing some research this weekend, I came across several companies that offer Pet Health Savings Accounts. It works somewhat like my own Health Savings Account my wife and I have with two exceptions. First, it isn't tax deductible. Secondly, it isn't tied to a high deductible insurance policy. Unfortunately, some of these companies are positioning themselves to compete with pet insurance companies for pet owner's dollars. 

I believe that a savings account and pet insurance should compliment each other, not compete against each other. The idea behind my HSA is that with my savings I can pay for minor medical issues, medications, etc. and the insurance policy will cover catastrophic medical issues. If I remain healthy, then my savings increase year by year. If I have a major health issue that I can't cover out-of-pocket, then my insurance will cover that. 

I try to put the maximum that is allowed into the savings account every year, and since my deductible is high, most years my insurance never comes into play. Does this mean the insurance is a waste of money (I pay quite a bit for it)? No, because all it takes is one year when you wind up in the hospital with a major illness or surgery to find out how necessary it is to have. 

For those people who advise starting a savings account, but not buying pet insurance leave the pet owner exposed to not being able to cover a major medical expense should it occur before their savings account builds up. And believe me - as a veterinarian, I see it happen.

Theoretically, as your savings build up, you can afford to raise your deductible and lower your insurance premium. This is what I've done over the years with my own health insurance. As premiums rose, it became almost cost prohibitive to keep maximum coverage. This usually meant changing to a higher deductible. The amount you choose for your deductible makes the biggest difference in the premium. What's interesting is to go to the websites of companies that allow you to choose your own deductible and notice the difference in the premium as you change this one variable when obtaining a quote. When choosing a higher deductible, make sure you can cover it out-of-pocket.

So, I prefer to advise the balanced approach. Pet owners should have a savings account, credit card, and pet insurance. Since pet insurance is indemnity insurance, the pet owner usually pays the veterinarian and then receives reimbursement from the insurance company within a couple of weeks after filing the claim. Having a credit card allows the pet owner to pay the veterinarian and then usually receive reimbursement before the credit card bill becomes due. As I said earlier, the savings can help pay for the deductible, co-pay and anything not covered under the terms of the policy.

Comments

[John Hayden]

The health savings accounts are very perfect topic and the savings accounts are my wife and I have with two exceptions.First, it isn't tax deductible. Secondly, it isn't tied to a high deductible insurance policy. Unfortunately, some of these companies are positioning themselves to compete with pet insurance companies for pet owner's dollars.
------------------------------------
[url="http://compareisas.org "]Compare ISAs [/url]

[Mark The Accountant]

This is excellent information. By coincidence I was looking to find some introduction to this subject matter so that I can understand the more intricate elements that are being offered elsewhere. I particularly like the way that you have managed to explain things in plain English. Many thanks.