Pets are great, but they can also be quite expensive, especially for unexpected emergency care. Pet owners have enough stress in just dealing with an unexpected medical situation for their furry friend. 

Having an emergency fund can be one of the best ways to take care of the financial stress portion of an emergency. 

Like other costs in life, some costs are relatively predictable, and others are not.

Let’s take an analytical approach to tackling pet emergency costs and establishing an emergency fund to smooth the ride.

Emergency Medical Expenses and Diseases

Of all of your pet related costs, emergency medical expenses and diseases are the most expensive and also the most unpredictable.  The challenge is finding reliable statistics on the probabilities. 

Here is a list of the some of the most common emergency medical visits.

  • Difficulty breathing
  • Ingestion Issues
  • Seizures
  • Bloating
  • Bites and Wounds
  • Burns
  • Heat Stroke
  • Eye Injury

One general statistic says that one in three pets will require emergency treatment each year. Using that statistic, one could argue that the probability would be to have an event every three years on average for your pet. If you have a large dog, for example, that has a lifespan of 10 years, that could be three events over their lifetime.

Another statistic states that the average emergency vet visit could likely range from $800 to $1,500 or more. Reading other ranges and statistics, we can easily see that the amounts can be much higher than that, with many procedures costing $3,000 and higher. Let’s use $3,000 per event as a reasonable number.

Here is some quick back of the envelope math assuming a large breed dog.

  • (3 likely events over the dog’s lifespan) x ($3,000 average cost per event) = $9,000 total cost over 10 years.
  • Cost per month = $9,000 divided by 120 months (10 years x 12 months) = $75 per month.

Chronic disease or illness is another potential cost. Let’s put that aside for now and stick with the $75 per month estimate in this case to cover emergency visits and injuries over a large dog’s lifetime.

Alternative Calculation using Public financial data

The other way to calculate this would be to look at what insurance companies pay to vets to confirm the medical cost numbers.

Reviewing the 2022 disclosures on Form10-K of Trupanion, Inc., a company that primarily provides dog and cat insurance can give us an idea. The company discloses that they have approximately 1.5 million subscribers, or people with pet insurance. 

Their gross margins (insurance premiums less vet bills) run about 30%. A large dog premium would likely be about $115 per month, which of course varies depending on the area of the country and age of the dog. 

So, let’s do some quick math to back into the vet cost:

  • ($115/mo premium) x 70% (Cost is 70% since the margin is 30%) = $80.50 vet invoice paid. Let’s round it to $81.
  • Coverage pays 90% so the vet invoice was really $90 after the deductible ($81 / 90% = $90)
  • Deductible can be $0 – $1,000 with $500 being the simple average. Lets go with $500 x 3 emergency events over the dogs lifetime = $1,500 ($500 x 3)
  • $1,500 / 120 months = $12.50 per month if you spread out the deductible over the dog’s lifetime
  • Total estimated emergency & illness vet cost per month over the dog’s life = $102.50 ($12.50 deductible + $90 vet bill after deductible). 
  • Let’s use round numbers and say $100 per month

Remember this is the average per month of all the subscribers. Obviously the emergency bills are quite large for some, and low for others that didn’t have claims. Getting all of the data and boiling down to a monthly number helps plan a monthly cost.

Emergency vet costs and Medical Treatment estimate

So, we have two back of the envelope calculations.

$75 per month of estimated emergency costs over the large dog’s lifetime using one general statistic and $100 per month from an independent source for coverage that likely includes emergency costs and disease management.

This gives us a range of $75 – $100 per month as a range. Not a bad starting point.

Creating an Pet Emergency Fund

Knowing that the cost ranges from $75 – $100 per month we can set up and establish our emergency fund.

You can use a separate bank account or keep track of the amount on a spreadsheet if it is in a comingled account.

The odds are that an emergency and chronic illness will be later in a dog’s life when they are older. This gives you time to start building up the balance.

If you want to be more conservative, in this case, you would start by funding the account with $100 per month, especially since that number likely includes chronic illness and disease management in addition to emergencies.

Ideally you want to put this on automatic pilot, having the funds routinely deposited into a high yield savings or money market investment account. 

If you have a brokerage account, a money market fund is a great choice, given the high interest rates these days. Some high yield online savings accounts pay pretty good as well. 

Brick and mortar banks are usually pretty pitiful when it comes to paying you interest, so I would avoid those. 

Utilizing the Emergency Fund

So, in theory, if you started this right when you got your dog as a puppy, you would have $1,200 in the account at the end of year one, $2,400 at the end of year two, etc. Of course if an emergency occurs you will draw down the account. 

Remember these estimates are based on a large breed dog. If you have a cat or smaller breed dog your costs will likely be lower. You can do the same math as we did in the example above. Just get an insurance premium estimate and adjust for the profit margin, copay and deductible as we did above. Using rough numbers you could also just take their monthly premium number and subtract $15 per month to get your self insurance amount (more on that below).

The nice thing about an emergency fund is that if you end up with extra money you don’t use, you can redeploy the funds for other needs. You also get the benefit of compounding interest by putting it into an interest earning account, which helps the account grow even more.

If you are just establishing this now and your dog is older, you likely need to put more in as the probability of an injury or illness is much greater as your dog ages. You can see this by looking at how the insurance premiums grow for older animals.

Other Ways to Pay if Your Emergency Fund is exhausted

If you have the unfortunate sequence risk of injuries or illnesses early in the dog’s life before your emergency fund builds up, you may need to find other ways to pay until you can get the fund built up again.

Some vets will allow you to go on a payment plan. However, these are becoming less common as vets have taken losses on trying to collect in many instances. This is likely why you see many vets requiring payment in full at the time service is rendered.

If you have a credit card with ample room, you could put the charge there temporarily until you get a personal loan or find another form of financial assistance.

If you have a pet emergency fund, you may have funds saved for other emergencies. Using one of your other funds is another short term solution. Just be sure to diligently replenish any emergency fund you used as soon as you can.

What about Pet Insurance Plans?

Insurance companies need to make money, so overall using the averages, you are likely going to pay more if you have a pet insurance policy.

For example, using the data from above, the insurance company will make approximately 30% over what they pay in veterinary bills. This means that you are paying them that higher amount plus the copay and deductible. 

The monthly payments for insurance turns out to be about $15 per month more than using health insurance in our example. This was the monthly premium of $115 less the estimated cost of $100 per month to self insure. 

In other words, using our example above, your cost would be $12,000 over the dog’s lifetime if you self insure ($100 x 120 months) or $13,800 ($12,000 + $1,800) over the dog’s lifetime if you have the insurance. Again these are rough estimates for emergency and illness care for a large breed dog, but you get the picture.

The bottom line is that pet health insurance generally costs more. 

When Pet Insurance Makes Sense

However, if you are trying to build up your emergency fund and are concerned of the risk, pet insurance companies may help alleviate that risk.

Note that you are still on the hook for the deductible and copay with insurance. Also be sure to read the fine print to know what is covered and what is not. There is often a waiting period after you sign up for coverage. Since preexisting conditions are often not covered, injuries or illnesses that occur during or before the waiting period are generally not covered.

Also, if you are unable to build up an emergency fund due to your financial situation, insurance might be an option that lets you avoid the likely urgent veterinary care bills over the dog’s lifetime. You can also argue that if you had a catastrophic life-threatening emergency claim (emergency vet bill of $5,000 – $10,000) you would be better off with the insurance. 

Time to Make a Decision – Self Insure or Get Insurance

One of the Pros of Self Insurance is that you are in complete control. You have the money and you pay the bill. You don’t have to worry about waiting periods, denied claims, and fine print. 

Knowing all of this and potential risks, you get to make your own informed decision of self insuring using an emergency fund or buying pet insurance. Don’t just rely on this article, be sure to do your research using other sources as well. The key is that you are being intentional and not just winging it.

Routine and Preventative Care 

Note that in the examples above, we are talking about establishing an emergency fund to cover pet emergencies and a significant or chronic illness such as cancer or diabetes. 

This does not cover the regular wellness and routine care such as an annual exam, vaccinations, tick repellent and other medical care to take care of your pet’s health.

Since these items are recurring and very predicable, an emergency fund is not really necessary for those costs. Instead, you should plan them as part of your normal annual budget.

Executive Summary: Using a Pet Emergency Fund for Emergencies and Illnesses

  • Having an emergency fund can help give you peace of mind if your furry family member needs emergency medical attention
  • On average your pet will likely need immediate care at least a few times over their lifetime
  • You can use insurance information and public financial data to estimate the cost of emergency care or chronic illness treatments over your pet’s lifetime
  • In our example of a large dog, self insuring will likely need you to save $100 per month over the dog’s lifetime
  • Pet insurance is another option, but it will cost you about 15% more per month (using our example of $115/mo premium vs $100/mo to fund it yourself).
  • Having insurance can be an option for someone concerned about a catastrophic claim. Be sure to read the fine print for coverage limitations before signing up.
  • One of the Pros of an emergency fund is that you are in complete control of paying the bill, and you don’t need to worry about fine print and relying on a third party to accept your claim
  • Routine care is outside the use of an emergency fund. You are best served by including those predictable costs in your annual budget.

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