Is Pet Insurance a Good Deal?

Vet handles a kitten on an examination table

(Image credit: Getty Images)

published 1 July 2019

Ryan Ermey: We all love our pets, but are you prepared in case something happens to Fluffy or Fido? Associate editor Pat Mertz Esswein joins the show to tell you why pet insurance might be a good idea in our main segment. On today's show, Sandy and I talk saving at the pump in the face of rising gas prices, and I get a lesson on possible changes to a popular tax credit. That's all ahead on this episode of Your Money's Worth. Stick around.

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Sandy Block: Yes. I mean, we don't really recommend driving across town to save 4 cents on gas. Don't be that guy. It's annoying. But if you are driving and you're crossing state lines, where you gas up could make a big difference because there's such a variation in state gas taxes. The federal gas tax, which is 18.4 cents per gallon, hasn't changed since the '90s, but state gas taxes go up all the time and several states are hiking their gas tax today, July 1st. The most notable one being Illinois, starting today, their gas tax is going to jump from 19 cents a gallon to 38 cents a gallon.

Ryan Ermey: I mean, I am part of a number of people I know that on shorter road trips in my youth would cross state lines before gassing up because I wanted to gas up in my native New Jersey because I'm not so great at pumping gas. Those of us who, I mean, for people who don't know, in New Jersey, all gas stations are full service, they pump them for you. So us Jersey kids, I've legitimately pumped gas less than a dozen times in my life.

Sandy Block: Well, Jersey is an interesting case because for years and years and years it had the lowest gas taxes in the country and everybody would fill up there, not because they pumped gas for you, although maybe that's a perk, but because it was so cheap. Well, a couple of years ago, many states, their roads were a mess. So one of the easiest ways to raise money and it's effectively raising money from the people who use the roads is to raise the gas tax, and New Jersey raised its gas tax. So it's no longer such a great deal, but what is a good deal in that direction is Delaware, charges just 23 cents a gallon, whereas in Pennsylvania it's 59 cents a gallon. So it's a very good chance if you're traveling through the East coast, you're going to pass through those two states. Well, gas up in Delaware, even if you have to pump it yourself.

Ryan Ermey: Right. And then when it comes to more general advise, I mean, this is something that we've covered variously in the magazine and online. We like the GasBuddy app still as an app that, it's crowdsource that lets you know the gas prices nearby. Obviously we tell you, don't go driving around town burning gas on route to saving 3 cents a gallon, but if you're on the road trip maybe look to fill up at wherever is cheaper. And by the way, also it makes sense to start thinking about filling up again when you get down to a quarter, even an eighth of a tank. I used to drive it down to when the needle was way past the E, throw it in neutral on downhills, that kind of a habit.

Ryan Ermey: I've also seen, I think we've, I mean, we will put all of our coverage on this in the show notes. I've also seen that the prices tend to fluctuate even at individual stations, during rush hour they can charge a little bit more than if you go early in the morning or late at night. So maybe right before you're about to check into your hotel, it might be a good time to gas up. And then the last thing I'll mention is that there are plenty of credit cards that reward you at the pump. It's one of these categories of spending that tends to be part of rewards programs. We will link to our list of all of our favorite credit cards. The one that comes to mind, we have the Chase Freedom card in there. They have cash back in rotating categories. But in the first quarter of this year, you could have gotten 5% cash back...

Ryan Ermey: Welcome back, and welcome back to the pod associate editor, Pat Mertz Esswein who joins us today on a topic that I think a lot of people really care about. It seems to me more and more people are devoting more time and money and energy and love, of course, to their pets. So today we're talking about the costs associated with owning a pet and specifically pet insurance. So Pat, thank you for coming on.

Pat Mertz Esswein: Well, to start with, even routine care can be a few hundred dollars out of your pocket occasionally or annually. But if your animal develops an infection, say an ear infection or a urinary tract infection, that can cost you up to $300 for vet care. If your dog eats something that he shouldn't, the average cost of vet treatment could be about $1500, which is painful for the owner.

Ryan Ermey: Yeah. Well at least they got the, at least they got to keep their dog. When a dog runs onto the highway, that's not always the case. So I mean, I think it should be self evident at this point that if you're looking to avoid paying that kind of money if something happens to your pet, insurance makes sense. But what do the plans typically cost, and what do and don't they typically cover?

Pat Mertz Esswein: What you're going to pay for pet insurance depends on the age of your pet, it's breed, where you live, and the type of coverage that you select. Generally speaking, you'll pay about $30 to $150 a month for a dog, and from $10 to $50 a month for a cat. Most plans cover accidents and illnesses, but they don't cover routine exams and care. So if your cat needs a dental cleaning, or you're taking your animals for annual checkups and vaccinations, pet insurance probably won't cover that, although you can probably add wellness coverage for an additional premium.

Pat Mertz Esswein: One thing you can do is talk with your vet. They may actually be willing to negotiate with you to some extent, if you're in a hard or a bad place, they might lower the price of care for you. Another thing you can do is look at, what's known as a veterinary discount plan. One that I've come across is petassure.com. And with that plan, with that membership plan, participating vets will give you a 25% discount on all medical care that's provided in the office by their staff. With Pet Assure, if you choose the family plan for two to four pets, you'll pay $149 a year. So that's one way to do it. Other than that, then it gets into maybe how to save on medicines.

Sandy Block: Yeah. And as is the case with people drugs, shouldn't you ask if there's a generic version or... What I've found, and I've owned a bunch of dogs, is that buying the meds from the vet is often the most expensive way to get them. Sometimes you can order them online for a much lower cost. And the other thing I've found is that geography matters, sometimes, and in an emergency this isn't going to work. But if you need surgery for a dog's knee or something like that, sometimes getting out of the major metro area can save you thousands of dollars because there is, since most people don't have insurance, that's basically charged what their markets will bear.

Pat Mertz Esswein: So like Sandy said, ask the vet if there's a generic that they can prescribe. If there isn't a generic, there may be a human equivalent that you can get at the drug store that might be less expensive. You should always shop. So with a prescription in hand from the vet, you can call around to local pharmacies or you can check on the website, goodrx.com. For routine preventive maintenance if you will, say for flea and tick prevention or heartworm, check at the local big box stores like Walmart and Costco. There're also some online sites like chewy.com, petsmart.com, PetCareRx, and 1-800-PetMeds.

Sandy Block: Well, unfortunately it's not popular enough. It's the saver's tax credit. It's been around for a while, and the purpose of this is to encourage the low income, moderate income people who think they can't afford to invest in a Roth or a 401(k) or a regular IRA. It's a very lucrative tax credit to offset the cost of savings. And basically, depending on your income and how much you can put away, you could get a tax credit of up to $1,000. If you put away $2,000 in a Roth or a 401(k) or an IRA, you could get a tax credit. And remember, a credit is a dollar for dollar reduction in your tax bill. So you could get a really nice refund and save for retirement at the same time. Unfortunately, only about 25% of people who are eligible for this claim it. And I think it probably is because when you look at the income levels, these are people who just say, "I can't afford to save anything."

Sandy Block: You don't have to save a thousand. You can save less. And there are, it's graduated how much credit you get. You could get a 50% credit if your income is higher. There's a bill pending in the Senate that would do two things. It would increase the eligibility so more people could take advantage of this credit, and it would make it at least partially refundable, which means that if the credit was so large that it wiped out your tax bill, and that's possible. If you get $1,000 credit, you may not owe $1,000, you would get that back. You basically get paid to save. So I think this is something we'll be watching, but I wouldn't wait for the Senate to act. If you hear this, read our show notes and realize that you qualify for the saver's tax credit, and we'll put all the income levels in the show notes. You can still amend your tax return, put the money in a Roth or a 401k or a regular IRA, amend your tax return, claim the credit, and you'll get a bigger refund.

Sandy Block: Right. Basically, once you wipe out your tax bill, you're done. So even if you were eligible for $1,000 credit but you only had to pay $500 in taxes, that's all you get. What this bill is proposing that you would... And there are some other tax credits that do this, that basically pay you if the credit exceeds the amount that, your tax liability. So that's, again, that's something we're, but I wouldn't wait for the Senate to act if you think you might qualify. And it's low income people. Actually for the lower amounts of the credit, the 15 or 20%, it is more a moderate income. And the other group of people who should take a hard look at this are part-time workers. You might be retired and working part-time, you might qualify for it, or maybe you're a stay at home mom or dad and you have some freelance income or something like that. You may very well qualify for this credit and you could put some money in to save for retirement.

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Block joined Kiplinger in June 2012 from USA Today, where she was a reporter and personal finance columnist for more than 15 years. Prior to that, she worked for the Akron Beacon-Journal and Dow Jones Newswires. In 1993, she was a Knight-Bagehot fellow in economics and business journalism at the Columbia University Graduate School of Journalism. She has a BA in communications from Bethany College in Bethany, W.Va.