Health benefits startup StretchDollar has raised $6 million from its latest seed funding rounds to improve its self-service platform, the company announced today.
The funding rounds were led by Fika Ventures and Oscar Health. VC firms Precursor Ventures and Springbank also contributed to the round, after leading fundraising efforts last year.
StretchDollar, headquartered in San Francisco and Pittsburgh, aims to help make health insurance benefits more affordable for small businesses. The company says it can help employers reduce burden by setting up health benefits for free in less than 10 minutes, deleting what is traditionally 100 hours of “painful” work, said Tianxiang (TX) Zhuo, general partner with Fika Ventures.
“Small business owners didn't start their companies to manage health benefits. I’ve yet to meet a small business owner who enjoys picking which hospitals their employees can go to, or which medications they’ll have access to. It’s a complicated and overwhelming task,” said StretchDollar CEO and co-founder Marshall Darr in the funding announcement. “Our solution keeps things simple, giving employees more choice while saving employers the hassle.”
Employees, with professional help, then sign up for insurance that fits their needs through individual coverage health reimbursement arrangements (ICHRAs), an increasingly popular option for insurance administration. Employers cover the expenses using pretax funds.
Oscar Health has been one of the most vocal proponents of ICHRAs. Although still a relatively small part of its business, the insurer is bullish they will continue to grow in relevance. The company is lobbying for legislation supporting ICHRAs at the state level.
“More than 50% of small businesses are unable to offer health insurance to their employees today,” said Oscar CEO Mark Bertolini in a statement. “Many businesses, especially those with less than 50 employees, do not have the resources to weather the skyrocketing costs of employer- sponsored plans. The individual market fills the gap: employers have an efficient way for employees to purchase health insurance and employees choose the plans that best fit their needs.”
Centene subsidiary Ambetter Health is another health plan open to ICHRA. New ICHRA plans will be available to members in six states beginning next year. Other companies, like Thatch, take a similar approach to StretchDollar to help employers with healthcare costs.
It’s not entirely clear how the new Trump administration will view ICHRAs during his second term, but supporters are hopeful senior officials will see the value in ICHRA, even if those same policy experts might view the Affordable Care Act broadly with more skepticism.