Decreases in snow cover due to climate change could alter the energetics and physiology of ectothermic animals that overwinter beneath snow, yet how snow cover interacts with physiological thresholds is unknown. We applied numerical simulation of overwintering metabolic rates coupled with field validation to determine the importance of snow cover and freezing to the overwintering lipid consumption of the freeze-tolerant Arctiid caterpillar Pyrrharctia isabella. Caterpillars that overwintered above the snow experienced mean temperatures 1.3°C lower than those below snow and consumed 18.36 mg less lipid of a total 68.97-mg reserve. Simulations showed that linear temperature effects on metabolic rate accounted for only 30% of the difference in lipid consumption. When metabolic suppression by freezing was included, 93% of the difference between animals that overwintered above and below snow was explained. Our results were robust to differences in temperature sensitivity of metabolic rate, changes in freezing point, and the magnitude of metabolic suppression by freezing. The majority of the energy savings was caused by the non-continuous reduction in metabolic rate due to freezing, the first example of the importance of temperature thresholds in the lipid use of overwintering insects.