Benefits are an employer's opportunity to define its culture and outcompete other companies in their industry. If you offer the right ones, it's sometimes impossible for a candidate to say no.
Adding pet insurance to your benefits package might be a good idea if your team operates in a pet-oriented industry, prioritizes pets in its company culture, or simply has pet parents! In this article, we'll show you how it's done.
What is a pet insurance benefit?
Pet insurance is a voluntary benefit employers offer their team members to cover the costs of their pets' medical bills. It works similar to employer-sponsored health insurance, but for our furry (or scaly) friends!
With insurance, pet owners can offset the cost of:
- licensed vet visits
- exam fees
- x-rays and ultrasounds
- prescriptions
- vaccinations
- chronic conditions
- surgeries
- anything else qualified under the policy
The typical pet insurance plan covers accidents, illnesses, hereditary conditions, and routine care visits. Most plans also offer preventive care coverage, so owners have the option of taking their pets to the vet for regular checkups.
As a benefit, how does pet insurance work?
There are two ways employers can offer pet care as a benefit:
- Providing access to an insurance plan employees pay for out of pocket. This could be offered through a group rate or discounted premium so it's cheaper than if they purchased the plan on their own.
- Covering the cost with a stipend. Some companies will reimburse the full premium. Others will cover a percentage or up to a certain dollar amount. A pet care stipend is not the same as insurance, but it still allows pet owners to have peace of mind about their pets' medical costs.
Most often, employers offer pet insurance as a group plan that lets them select from different plans and coverage levels. Employees pay a certain percentage of the premium each month to participate in the policy and can use it for all of their pets.
There are four parts to a pet insurance policy:
- Premium. Your employees will pay a monthly or annual premium to maintain their policy.
- Deductible. Before coverage kicks in, pet owners pay an out-of-pocket cost — usually under $1,000. Most companies have an annual deductible, but a few have per-incident deductibles. With a per-incident deductible, your employees won't have to meet the deductible to receive coverage for injuries and illnesses that happen more than once.
- Reimbursement rate. After meeting the deductible, pet insurance pays a percentage of the cost for eligible expenses. The percentage varies between 50% and 100% based on the insurance provider and policy type.
- Maximum limit (annual). The insurer will pay only up to a certain amount each policy period. Once an employee reaches that limit, they won't receive any more reimbursements for that year.
Pros and cons of offering employees pet insurance
Almost 70% of American households have pets. 1 in 5 acquired a pet during the pandemic. And Millennials — who make up the biggest proportion (35%) of the labor force — are also the largest percentage of pet owners.
The benefits of owning a pet are tremendous. They reduce stress, lower blood pressure, and help their owners stay active. Plus, they make us all around happier people.
But all these benefits come at a cost. The average pet owner spends $1,400 annually to care for them, and many spend more on their pet's health care than their own.
Being a pet-friendly employer by offering pet insurance is a great way to attract and retain employees. And it's certainly a unique employee benefit — just 15% of employers offer it.
Pros:
- Lower cost of care for pet parents. For the employee, this can mean the difference between managing their pet's medical issues and having to make tough choices about whether they can afford treatment.
- Lower turnover. Part of creating an effective employee retention program is offering the right benefits. Considering the high costs of replacing an employee (usually up to 200% of their annual salary), it's almost always better to offer the perks and benefits that will make them stay.
- Higher satisfaction and morale. Happy employees are more productive. Two-thirds of employees say financial stress negatively impacts their professional lives. When that stress is tied to their pets' health, it becomes much more difficult to focus on their job.
- Supports employees' entire families. Like child care benefits, employer-sponsored pet insurance allows you to extend your support beyond just your team members.
- Reputation as a pet-friendly workplace. For some job candidates, pet insurance might be the voluntary benefit that pushes them to accept an offer.
- Creates a more inclusive benefits package. Child care benefits and family health insurance are incredibly value for employees with families, but utilization rates for these programs are lower for single employees. By offering pet insurance benefits, you can demonstrate your commitment to caring for all aspects of your employees' lives, regardless of their family composition.
Cons:
- Potentially pricey for employers. Depending on the plan you choose, pet insurance could cost you up to $15 per month, per employee. Or, it could cost upwards of $60 per month for comprehensive plans. Since most of your employees probably have pets, it's a benefit you can expect a lot of them to enroll in.
- Complicated to manage. With so many plans out there and different coverage levels available, your HR team will have a hard time choosing one with the right flexibility and features. Plus, pet insurance plans are regulated differently from state to state, making them more challenging to offer to a remote or multi-state team.
- Potentially few takers. Not all employees have pets. It may be difficult to justify the expense for such a small group of people. If they already have pet insurance of their own, their enrollment in your company's largely depends on whether they see additional value in it.
When to offer pet insurance benefits
Like other fringe benefits, pet insurance is usually more of a nice-to-have than a necessity. If you're just starting to create your employee benefits package, it's a better idea to focus on the core benefits first.
Offer pet insurance as a voluntary benefit if:
- you're in an industry where your employer brand will benefit from it (e.g. veterinary or pet health care software).
- at least 25% of your employees have pets.
- you already offer generous employee benefits packages.
- you want to show employees your company cares about their wellbeing — both at work and at home.
- you're already doing the essentials to support their financial wellness and work-life balance.
When not to add pet insurance to your benefits package
Like we said, pet health insurance isn't a necessity. Like many of the best employee benefits, their success and value depends on enrollment and interest from your team. If they're uninterested or have trouble using it, it won't serve any of the advantages we mentioned.
Don't add pet coverage to your package if:
- most of your team members are not pet owners or aren't interested.
- pets aren't a significant portion of your company culture.
- you don't have an HR budget or can't afford the premiums.
- you're just starting to build out your benefits package and haven't decided on core benefits yet.
- you don't have a way to manage compliance and keep track of enrollments.
What does your pet insurance cover?
When offering pet insurance policies to your employees, your most critical consideration is the extent of its coverage. You want to offer a policy that meets their needs and delivers the best value for money.
When it comes to insurance for household pets, there are three plan types:
- Accident-only plans (cheapest). A pet emergency like a broken bone or attack from another animal can easily cost thousands. These plans cover the costs of accidents and injuries, but employees pay for preventive care and treatment out-of-pocket.
- Comprehensive plans (most popular). These offer a higher degree of coverage, including illnesses like allergies, congenital conditions, and chronic diseases. They also cover surgeries and breed-specific ailments.
- Wellness plans (most expensive). These plans include preventive care such as vaccinations, wellness exams, and flea/tick prevention. They also cover dental cleanings, spaying and neutering.
How much coverage you should offer depends on what your employees are willing to pay and the type of plan they're looking for. You'll also have to factor in whether their current pet insurance provides enough coverage or if they need more robust plans.
What it doesn't cover
There are lots of pet care costs insurance won't cover, even at the highest level of coverage.
These include:
- Pre-existing conditions like hereditary and behavioral issues
- Elective procedures like cosmetic surgeries
- Alternative therapies (acupuncture, hydrotherapy)
- Breeding/show costs
- DNA testing
- Accidents and illnesses resulting from cruelty and neglect
- Experimental treatments with little scientific evidence
- Everyday costs of pet ownership (e.g., toys, food, treats)
How to offer a pet insurance benefit
Making pet insurance available to your team shows you understand and care about the close emotional bond employees have with their pets. But it works differently from other voluntary benefits.
To ensure a successful program your team gets the most out of, here's what you need to do:
1. Evaluate your employees' needs and interest.
Most employers have conditions for enrollment in employee benefits, especially if they choose to cover the full cost.
Review the following questions with your team before launching your program:
- Who can enroll in this benefit? Only full-time employees? Or will we extend it to part-time employees and contractors?
- How long do they have to be at the company before they can enroll in our pet insurance policy?
- Will we cover costs for employees with multiple pets?
- Are there any restrictions to types or numbers of pets?
2. Determine eligibility.
Most employers have conditions for enrollment in employee benefits, especially if they choose to cover the full cost.
Review the following questions with your team before launching your program:
- Who can enroll in this benefit? Only full-time employees? Or will we extend it to part-time employees and contractors?
- How long do they have to be at the company before they can enroll in our pet insurance policy?
- Will we cover costs for employees with multiple pets?
- Are there any restrictions to types or numbers of pets?
3. Research potential pet insurance providers.
Finding the right pet insurance provider for your team depends on their needs and preferences. So, do some research to find the best plan type for you and your employees' requirements.
When researching providers, consider:
- Reputation
- Coverage options
- Deductibles
- Payment options and terms
- Customer service ratings
- Claims process times
Since you surveyed your employees, you'll already know the level of coverage your they're looking for. Evaluate insurers against these preferences to find the best fit.
4. Select a provider and establish a plan.
Like an employer-sponsored health plan, you can either cover the full cost of pet insurance or split it with employees to give them a discounted rate.
If you split insurance premiums, you'll deduct them from your employees' wages post-tax.
If you choose to go this route, we recommend offering multiple coverage options. That way, they can choose the one that best fits their budget and pet care needs.
There's a better way to cover your employees' pet care expenses...
Providing pet insurance can be an excellent way to show your employees you care about their pet's wellbeing (and, by extension, theirs).
But finding a vendor that works in all the states you have employees in can be challenging. Even if you do, the chances of them offering the coverage your employees are actually looking for can be slim.
It's a lot easier to offer a perk stipend.
A stipend is easier to enroll in on their end. And it's way easier to manage on your end. Plus, there are no restrictions — they can use it with a vendor of their choice to cover whatever pet-related expenses they'd like.
Compt makes it easy to offer 100% tax-compliant stipends. All you have to do is add a pet care stipend to the platform, set limits and eligibility requirements, and let them decide how they want to use it. See how it works.