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Co-insurance is the percentage of the total vet bill your insurance company will reimburse you for on a claim to your pet health insurance. What’s co-insurance?

Co-insurance dictates the breakdown of costs you and your pet insurance company pay for routine care, a procedure, diagnostics, or medicine if your claim is approved. 

Co-insurance isn’t a set dollar amount—instead, it’s a percentage of the cost of payment for care. Btw, ‘co-insurance’ is different from ‘co-pay,’ which is a fixed amount you pay to go to the doctor’s office or pick up a prescription. 

Anyway, back to co-insurance: Insurance companies calculate your percentage of co-insurance every time they figure out how much to pay you for your approved claim. The equation for your claim payment usually looks like this:

(cost of procedure x co-insurance) – deductible = claim payment

A few notes here: deductibles apply to most coverages and add-ons, except preventative care. And the deductible is only factored into the claim payment until you’ve met it—more on that later!

Wait, what’s a deductible?

Good question. A deductible is one part of your participation in the cost of your claim. You choose this amount when purchasing your policy and have the option to increase it at any time, or decrease it once a year at your policy renewal.

For this policy, the deductible is annual, which means it can be exhausted in one big claim, or met over multiple claims over the course of a year. (Btw, your deductible on a renters or homeowners insurance policy works pretty differently. You can learn about that here.)

How does co-insurance work?

Let’s start off with an example. Let’s say:

Your dog, Mogley, needs knee surgery (aw, poor guy!) 

The procedure costs $6,000, so you file a claim for that amount

Your policy includes 80% co-insurance and a $250 deductible

Here’s how much your claim payment would be calculated:

($6,000 x 80%) – $250 = $4,550

Since your carrier would pay $4,550 towards this claim, you and Mogley would be responsible for the remainder—in this case, $1,450 (that amount includes the $250 deductible).

Let’s say a few months later, you have to file another claim, because Mogley swallows a mysterious object. The procedure costs $1,500. Since you already paid  your deductible for the year (yay!), here’s what your claim calculation would be: 

($1,500 x 80%) – $0 = $1,200

You’d only need to pay $300 for the procedure ($1,500 – $1,200). This is how your claims would work for the rest of the year until you reach your annual limit.

Co-insurance and coverage limits

Let’s back up a sec. Aside from selecting your co-insurance and deductible when you get a policy, you also choose your coverage limit. That’s the maximum amount of coverage your insurance company would pay you over the course of a year. 

Using the example above, let’s say your insurance company owed you $7,750 for one claim, and $4,000 for another—all within the span of a year.

In order to get the full $11,750 from your insurer, you’d need to have an annual coverage limit over $10,000. Otherwise you’d need to pay the remaining $1,750 for your second claim, and potentially lots more out-of-pocket if you file another claim the same year.

Upping your coverage limit makes your policy a bit more expensive, but you’ll be grateful for the extra safety net if anything goes wrong.

How much co-insurance should I get?

Typically, policyholders get 80% co-insurance, which means we pay 80% and you’re responsible for the other 20% of your pet’s medical expenses. But the right co-insurance percentage for you depends on how much you can pay out-of-pocket if you file a claim, and how much you’re willing to pay for your insurance policy itself.  

There are a few things to consider here. First off, choosing a lower co-insurance can impact your premium. If you’re looking to only get insurance for catastrophes (like surgery, or cancer treatment), and don’t mind paying for a majority of the usual costs of being a pet parent, like prescription medications… then you may want to opt for a lower co-insurance, since it’ll lower your monthly premium. 

It’s also worth asking yourself: In the worst-case scenario, if your pet needed an extremely expensive procedure or treatments, how much could you realistically pay out-of-pocket?  

Let’s say your dog needs to have surgery for a broken leg. This could cost as much as $5,000! Assuming you have a $250 deductible, a plan with 90% co-insurance would mean you’d be paying for $750 of that total cost (10% of the total plus your $250 deductible). That’s not a small bill to take on, but compared to the $1,750 you’d be paying for with a 70% co-insurance with that same $250 deductible, you can see how much of a difference your co-insurance makes.

Still not sure what co-insurance percentage is right for you? Ask your vet what the most expensive procedure your four-legged friend might need would cost, and calculate how much you could hypothetically afford to pay out-of-pocket.