The Case For Employer Paid Group Pet Insurance as an Employee Benefit

Disclosure: Myself and my company, AstroPaws, are brokers for pet insurance policies and have a financial incentive to sign people up for pet insurance. That said, our commissions do not increase the cost or affordability of plans.

The Situation

Economic euthanasia, a decision to put down a pet when the cost of treatment is too high for a family budget, is a decision that many families face every year. According to Waggle.org, a 501c3 Non-profit, 500,000 pets and their families are faced with this decision annually. Waggle says that many of these pets have a good prognosis if treatment is received, but the cost holds families back from treatment.

Waggle has been doing their part to curb these unfortunate ends to pet’s lives through their crowdfunding platform. They’ve helped over 1,000 pets in 2023 get treatment that they needed, double what they accomplished in 2020. An incredible effort on their part for a very difficult aim. That said, we are still left with 99.8% of economic euthanasia cases resulting in unnecessary death and periods of grief and loss for their owners. Many point to pet insurance as the logical way to circumvent these difficult decisions.

Pet Insurance as an insurance offering began in 1982 when Jack Stephens wrote the first policy for the TV dog Lassie. The intent of the plan was similar to a human health insurance plan, covering the costs of veterinary bills and any accidents, and limiting the number of economic euthanasias in exchange for a premium. In 40 years, the industry grew from one policy to over 6 million pets insured in North America 2023, according to NAPHIA. That represents about 3.69% of the total cats and dogs in North America.

A main factor to the growth is the rising cost of veterinary bills, almost quadrupling in the last 10 years. For people who would have a difficult time paying for a surprise vet bill (which is 63% of people according to surveys), it makes a lot of sense to purchase. Removing the risk of unexpected costs is what insurance is all about. Yet, the industry still has some problems that make it less appealing to the majority of pet owners who have decided to self-insure. With regular pet insurance plans, the premium rises with age, there are exclusions for things like pre-existing conditions, and some breeds may be more expensive than others. Many others who have decided to self-insure, may see the value in pet insurance, but have just decide that the monthly premium cannot fit into their budget, and they will deal with the financial circumstances as they happen.

Why employer paid group pet insurance might solve this problem

Pet Insurance as an employee benefit has been around the industry for at least a few years. The standard model is, when a company signs up, they are assigned a discount code, and their employees sign up individually with this code for discounted pet insurance and are billed on their own. It’s normally sold as an easy win for companies to add another bullet point employee benefit on their Linkedin Job Posts, with no additional cost to the company. The Pet Insurance company gets a captive market, which justifies the discount codes. It’s a win-win for each.

While there’s nothing inherently wrong with that, the end result does not move the needle much in terms of additional pets insured, and economic euthanasias avoided. An average enrollment rate on a plan like this is about 5% of employees, roughly the same as the enrollment rate of the general population.

3 years ago, a long time player in the pet insurance space decided to try and change the way we think about pet insurance as an employee benefit. They crafted a type of policy that works more like human health insurance. The main differences would be as follows.

• One Group rate for all dogs and cats, regardless of age, breed, and pre-existing conditions

• Coverage for pre-existing conditions after a waiting period

• Benefits platform integrations and payroll deductions

  
  

What was the result? In the first few years of offering this plan, the most exciting discovery was that, in instances where employers contributed at least 50% of the premium for the policy, enrollment in the plans would hit, on average, 70% of the employees. That would be about everyone that had a pet, according to country pet ownership averages.

What does that mean for economic euthanasia? It means that the owners of those pets likely won’t face the difficult financial decision, because they have pet insurance, and that plan covers things that individual pet insurance plans won’t.

Why does the investment for the company make sense?

If you consider the average monthly cost for a pet insurance policy for a dog to be $50, and for a cat to be $30, then the economic investment for a company for each pet an employee signs up is somewhere between $300 and $180 a year. By contrast, a human health insurance plan costs employers anywhere from $6,584 to $16,357 annually. Dental insurance, as another voluntary benefit, costs employers anywhere from $166.80 to $107.28 annually per staff.

I don’t want to underscore that this is an increase of expenses to an employer’s bottom line. What I would argue is, that for a much more affordable price you are providing a service to your pet-owning employees that is more financially felt than dental insurance and has similar, life-saving characteristics that are found in group health insurance.

Why do companies offer voluntary benefits like health and dental to employees? Recruitment, retention, productivity, and of course, because it ends up being the right thing to do. How does Pet insurance fit into these objectives though?

1. Recruitment: from a recruitment perspective, instead of just a bullet point on your job board, you’ll be able to speak to real tangible benefits you offer that go above and beyond the normal to potential hires that saves them money and recognizes their values.

2. Productivity: The pain and suffering from the loss of pets can be debilitating for employees. By getting employees to sign up proactively for pet insurance, you’re setting them up to limit the trauma they may experience due to unforeseen circumstances and the dread of financial mismanagement of those experiences.

3. Loyalty: This type of benefit is unique and something your employees likely won't get from your competitors. Moving to a company that does not offer pet insurance coverage for your employee’s pets pre-existing conditions may end up costing them thousands of dollars annually for things like epilepsy drugs, negating some of the pay bump from hiring.

4. Good for society: It’s the right thing to do. At AstroPaws, we believe our pets are members of our family, and we’d do anything for our family. By supporting your employee’s family structures and keeping their pets protected, you may be helping to end economic euthanasias of pets.

Worried about administrative overhead of managing the plan? With the group rates for cats and dogs, there’s not much complexity to the plans and most is managed automatically through your regular benefits administration software.

Of course, pet insurance will not be for everyone. Unlike dental or eye insurance, your employees won’t all universally be applicable for this benefit. Many will not have pets, and some won’t even like animals! For those who do have them, however, it may be a difference maker in the loyalty that they have for you and what you're trying to achieve as a business.

Want to talk about voluntary benefits and how Group Pet Insurance might be a good fit for your employees? Book a time to talk with me and the team, we’d be happy to help you out. 

Book time with the team.