A pacemaker and cancer radiation treatments for your dog? An MRI and kidney transplant for your cat? These are the types of medical procedures available for our furry friends.As medical technology advances for pets, so do costs. They can run into the thousands of dollars. As a result, the topic of pet health insurance regularly crops up.With pet insurance you pay a monthly premium, and the insurer will reimburse you for eligible medical expenses related to accident or illness.Americans will spend nearly $41 billion on their pets this year, according to the American Pet Products Manufacturers Association. Of that, about $10 billion is for veterinary care.Generally, consumer advocates aren't fond of pet health insurance, 84 percent of which is for dogs. Consumer Reports published a quick take in its July issue. In an article titled "Why Pet Insurance is Usually a Dog," the magazine cited the deductibles - the portion you pay before insurance kicks in - and the list of procedures that many pet insurance policies exclude. As a result, you could pay far more money for pet health insurance than it will save you.Still many pet owners spend thousands of dollars to try to save their four-legged friends. Is pet health insurance worthwhile? The answer in large part comes down to one very indelicate question sure to give devoted pet owners angst: How much am I willing to spend to lengthen my ailing pet's life?The question is important because you are likely to incur the largest vet costs while attempting to extend the pet's life.Owners who consider the animal part of the family might consider it crass to come up with a maximum dollar figure. But that number is fundamental to the decision on whether to buy insurance. If you can afford that amount, you don't need insurance.Pet insurers often point to multi-thousand-dollar pet surgeries. Pet owners pay an average surgical vet visit per year of $453 for a dog and $363 for a cat, according to estimates by the pet products manufacturers association. But that's a yearly average of all pet owners, some of whom paid for no surgeries and others who paid thousands. If you are the type of pet owner who will extend the life of Fido or Fluffy at any cost - and would rack up debt to do it - pet insurance becomes more worthwhile.During the early 1980s a typical pet owner would put an animal to sleep if treatment cost more than $250, said Jack Stephens, a pioneer in the pet-insurance industry. For 24 years he was chief executive officer for the largest pet insurer, Veterinary Pet Insurance.Today the dollar figure is closer to $1,500, said Stephens, who now leads an insurer called Pets Best Insurance. He says the escalation has less to do with rising prices and more to do with pet owners developing a deeper bond with the animals.Some considerations:Math. With a fixed monthly insurance premium of $30 and a 12-year lifespan for a dog, for example, you would pay $4,320 in insurance premiums from birth to death. And if you don't pay extra for a fixed rate your premiums could increase each year as your pet ages. That's a lot of money if you have a healthy pet and receive very little in reimbursements. But you will make out well with insurance if you are reimbursed for a big-ticket vet bill before you have paid much in premiums.Many people who buy pet insurance aren't upset if they don't file large claims to make the math work, said Loran Hickton, a spokesman for Pets Best Insurance. It's similar to not being upset about not using a child's health insurance. "The value is what-if. The value is not what you use," he said.Self-insuring. If you instead set aside that $30 a month in an earmarked "Fido-gets-sick" account earning 5 percent interest you would accumulate almost $6,000 before he died, assuming you didn't need to tap the fund.Stephens said self-insuring is an option, but he contends that most people won't do it. "It sounds good, but most of us aren't disciplined enough to maintain it," he said. And self-insuring doesn't work well if you have a large veterinary expense before you have saved much in Fido's fund.Deductibles, co-pays and maximums. A number of factors reduce the amount the insurer will reimburse you. Most plans feature $50 or $100 deductibles per ailment. Some pay 80 percent of the vet bill, while you pay 20 percent, after the deductible. Most have lifetime maximum payouts and per-ailment maximums.Benefit schedules. Most insurers have benefit schedules that dictate the maximum amount they will reimburse for each diagnostic test or treatment, regardless of what your vet charged you.For example, imagine your dog was attacked by another dog and needed treatment for bite marks. VPI, the nation's largest insurer, would pay at most $275, $131 and $95 for various portions of the diagnosis and treatment of multiple bite wounds, for a total of $501, according to its "Superior Plan" benefit schedule. It wouldn't matter if you had to pay the vet more, you would not be reimbursed for any more than those limits.Exclusions. Insurers typically exclude pre-existing conditions from coverage. So to have an ailment's cost covered you have to buy pet insurance before a problem develops. That means buying coverage early in the pet's life. And basic pet insurance does not pay for general wellness exams and routine care, such as vaccinations and neutering.Pet insurance can be expensive and, like most insurance, complicated. A disciplined consumer might be best off self-insuring. But if you think pet insurance might be for you, ask your veterinarian which insurers other clients have had good experience with. And become familiar with the details of policies you are considering.Gregory Karp is a personal finance writer for The Morning Call in Allentown, Pa. E-mail him at yourmoney@tribune.com.
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