Why Pet Insurance Belongs in Your Employee Benefits Package

Quick look: Pet insurance is quickly moving from a “nice-to-have” perk to a powerful retention tool. With nearly two-thirds of U.S. households owning a pet, and younger generations leading the trend, offering pet benefits, like insurance, a wellness plan, or both, signals that your company cares about employees’ lives beyond the office.

With 95 million U.S. households owning at least one pet, there’s a strong chance pet owners make up a sizeable portion of your team. Offering pet insurance as an employee benefit is a low-effort, high-impact way to show you see and support them.

According to the American Pet Products Association (APPA), U.S. pet industry spending topped $158 billion in 2025, a figure that reflects just how seriously Americans take their animals’ care. For employers, that spending signals that employees are deeply invested in their pets’ well-being, and a benefits package that reflects that can be a differentiator for retention and recruitment.

Read on to learn about current pet ownership trends, how pet insurance and pet wellness plans differ, what each may cover, and why these benefits are becoming must-haves for employers, especially small businesses looking to compete with larger organizations.

U.S. pet ownership by the numbers

Americans’ bond with their pets runs deep; 97% of pet owners consider them family members, and their spending reflects that.

While dogs and cats top the list, American households share their lives with a variety of animals:

• Dogs (71 million households)
• Cats (53 million households)
• Freshwater and saltwater fish (10 million and 2 million households, respectively)
• Birds and small animals (6 million households each)
• Horses (2 million households)

The financial commitment can be significant. According to Rover, annual cat ownership costs range between $765 and $2,715, and dog-related expenses can run from $1,390 to $5,295. Further, the APPA found that 22% of American pet owners are worried about access to veterinary care, with affordability being their top concern.

Stress over pets and finances can affect focus, morale, and productivity at work. In fact, Wagmo reports that 30% of working pet parents are significantly stressed by their furry friends’ healthcare expenses, an issue that pet insurance can help mitigate.

The ins and outs of pet insurance and pet wellness coverage

The North American Pet Health Insurance Association’s (NAPHIA) 2025 State of the Industry Report found that 7 million pets are insured in North America, a 12% increase from the prior year. Total gross written premiums reached $5.2 billion, up more than 20% year-over-year. Despite this growth, only about 5% of dogs and 2% of cats in the U.S. are currently insured, signaling an unmet need that employers can help address.

Pet insurance and pet wellness plans are often grouped together, but they serve distinct purposes. Understanding the differences can help employees make more informed decisions and enables employers to clearly position the value of each.

Pet insurance covers:

• Accidents and unexpected illnesses
• Surgeries and hospitalizations
• Diagnostic tests and imaging
• Prescription medications
• Chronic conditions (varies by policy)

Policies average between $23 and $46 per month with a deductible. Employees pay the vet upfront and file for reimbursement afterward.

On the other hand, pet wellness plans focus on routine and preventive care, including:

• Annual wellness exams
• Vaccinations and preventive care
• Flea, tick, and heartworm prevention
• Dental cleanings
• Routine screenings and bloodwork

Unlike insurance, wellness plans typically have no deductibles, no waiting periods, and no breed or age restrictions. Employees can use them from day one.

The two aren’t competing options; they’re complementary. An employee with both has routine care covered and a financial safety net for the unexpected.

Millennials and Gen Z are driving pet ownership and benefits expectations

Today’s workforce is more pet-oriented than any generation before it. Many Millennials and Gen Z employees are choosing to parent pets rather than children, as U.S. birth rates continue to decline. USA Today research found that two-thirds of respondents ages 18–26 had gotten a dog instead of having a child, at least for now. The APPA’s latest data confirms that trend, with Millennials and Gen Z leading the growth in cat and dog ownership.

These generations now make up the majority of the workforce, and their benefits priorities influence what businesses offer. According to Gallagher’s 2025 Benefits Benchmarks Report, the number of employers offering pet insurance has jumped from 23% in 2023 to 33% today.

But including pet insurance in your benefits package isn’t just about appealing to younger workers. Research shows that 63% of pet owners, regardless of generation, say pet-friendly benefits increase their likelihood of staying with a company, and 76% of working pet parents say these plans should be standard.

Easier access to the benefits that help you stand out

Small businesses must regularly evaluate their benefit offerings to remain competitive. A Forbes survey found that 40% of employers believe their workers would leave for better benefits elsewhere, and 10% of employees would accept a pay cut in exchange for stronger offerings.

Offering pet insurance and/or wellness as an employee benefit gives SMBs a relatively low-cost way to differentiate. However, sometimes sourcing robust benefit plans independently can be challenging for smaller employers. That’s where a professional employer organization (PEO) can help.

PEOs, a type of human resources (HR) outsourcing provider, leverage group purchasing power to offer negotiated rates, fixed-cost multi-year plans, and employer contributions at a lower price point than most SMBs could secure on their own.

Working with a PEO like ExtensisHR also gives businesses access to a broad suite of voluntary benefits alongside pet wellness and insurance, including:

• Supplemental health insurance (accident, life, critical illness, and hospital indemnity)
• Financial and legal advisement programs
• Identity theft protection
• Commuter benefit programs
• Family-forming support
• Cancer care resources
• Discount programs

What’s more, ExtensisHR’s Employee Solution Center is dedicated to making the benefits experience seamless for your workforce, answering employee calls in under 15 seconds. By letting us help your staff navigate open enrollment, plan comparisons, qualifying life events, and more, you can focus on the activities that drive growth while your workforce enjoys the benefits they deserve.

The right PEO makes competitive benefits accessible, without the administrative burden. Wondering if it’s the right move for your company? Take our quick quiz to find out.