Should Pet Insurance Take Priority Over Employee Benefits?

By Dan Eisner, Employee Benefits Advisor

There has been consistent industry coverage over the last number of years around pet insurance. Some employers are promoting the fact that they provide pet insurance to employees, and some employees are lamenting if it is not available to them. As a seasoned employee benefits advisor, I am struggling to understand the logic behind the appropriateness of such a benefit and how to find balance.

Please do not get me wrong. On a personal level I am a huge pet lover and have had dogs almost my entire life – I currently have two Schnauzers named Beau and Aero (yes, like Bow and Arrow!). However, I also know that my clients are struggling to just maintain the status quo for their employee benefits programs. Amid continued inflationary pressures on employee benefits programs, averaging 6% annually over the past 25 years and forecasted at 7% for 2026, this is a lot of pressure to support both employees with their benefits programs and corporate budget objectives. How can you do both?

This may surprise some, but pet insurance has been around for a long time, even longer when you look south of the border to the U.S. market. If we look back nearly 20 years to the exceptionally tight labour market of 2007, when unemployment fell below 5–6%, employers were seeking ways to differentiate themselves in order to attract top talent. A few companies in Canada looked south of the border and saw U.S. companies adding pet insurance to their group benefits offering and thought they might try it in our local market. In 2008 came the “Great Recession” where companies reverted to cutting their pay packages, and that was pretty much the end of pet insurance, at that time.

We have recently heard the topic of pet insurance coming up again more broadly in the employee benefits industry and there is lots of information in the cyber-universe. However, the labour market is nowhere near as tight, so should we really be talking about it again? Some might argue that organizations are simply responding to different demographics and different needs in the workforce – those that may choose to get a puppy instead of perhaps having children. And most pet owners would agree that the cost of veterinary care is increasing, and pet insurance might well be a way to diffuse the financial adversity when that puppy gets sick. If an employer offers pet insurance, might a potential employee be swayed to come and take a job over a competitor? It is a possibility.

With many younger demographics in the workforce, it is already hard enough to convince them of the value of certain benefits that they hope to never need (i.e., life, disability and catastrophic drug insurance). However, for the same reasons that we should all carry catastrophic insurance on our homes (i.e., fire and earthquake) and our cars (i.e., third party liability), there is substantial value in these types of benefits offerings. Distracting employees with another “perquisite” like pet insurance could potentially detract from the value of the current traditional “benefits” that they may ultimately need.

Arguably we could be looking at somewhat of a slippery slope around new benefits. Could the introduction of pet insurance start to set expectations around, perhaps, time off or leaves for pet sicknesses and bereavement, or “paw-ternity” leaves around the arrival of a new puppy? For convenience, I have only been referring to dogs and puppies but let’s not forget about the cats, hamsters, fish or other “pets” that are a matter of preference.

Company-paid Extended Health benefits are one of the last true tax shelters in Canada. When employers pay for the cost of these benefits, there is no taxable benefit to employees (outside of Quebec). On the other hand, any form of direct financial support (i.e., company-paid pet insurance) or indirect financial support (i.e., wellness spending accounts with pet insurance as an eligible expense) results in a taxable benefit to employees.

As I mentioned, I am a big pet person myself. However, when my wife and I added Beau and Aero to our family, we did so knowingly, accepting the potential costs (and love and affection) that come with pets. I do not think it is reasonable for me, or any other employee, to expect an employer to be responsible for those costs. Conversely, I greatly appreciate the efforts my employer makes to maintain my current coverage for areas like drugs, paramedicals and vision care, in spite of the inflationary pressures impacting current employee benefits programs.

There is no question that pets play a significant role in many of our lives, but decisions around employee benefits programs must be practical to ensure they are sustainable. By focusing on programs that safeguard employee health and wellbeing in the most impactful ways, employers can ensure they are investing where it truly counts.

Should you have any questions about the above, please do not hesitate to contact any member of our team.

ZLC Employee Benefits Solutions is one of the fastest growing advisors for employee benefits and group retirement programs in Vancouver and we are fortunate to have the best people, resources, and clients. We provide value by leveraging one of the most skilled benefits teams – collectively almost 500 years of experience within our team of 21 employee benefits specialists. We have been working with businesses ranging from 3 to over 75,000 plan members for over 40 years.