Thatch raises $38 million Series A led by General Catalyst and Index

I found out recently that I'm going to be a dad. My wife, Christina, is as type A as I am (and I mean that with all the love in the world) so she researched and found the best OB-Gyn for her specific needs in Austin where we live. Unfortunately, it turns out this doctor wasn't covered by my wife's company's insurance plan.

Nearly everyone has had a similar experience dealing with out-of-network providers or services that aren’t covered by their employer-sponsored health plan. Employers are trapped, too, caught between budget concerns and decent options for their team. The status quo is not working. Heading into annual open enrollment this fall, nearly half of employers will see double-digit insurance rate increases for next year, again. Worse, health outcomes are going down as costs go up, and rising premiums put more of the burden on employees than ever before.

A New Approach to Health Benefits

Today, the company Adam Stevenson and I co-founded, Thatch, announced $38 million in new Series A funding to give companies and brokers a better option. Our team has built an easy-to-use platform that helps employers save money while giving employees the freedom to choose their healthcare coverage.

We’re already working with hundreds of employers across the country to offer options that are equivalent or better than traditional employer group plans (the kind of insurance most full time employees have today), but more personalized and lower cost. Now, Index Ventures and General Catalyst are leading an investment to help scale the Thatch approach to millions more. They’re joined by new investors SemperVirens and The General Partnership, and existing investors a16z and Avid Ventures. 

We’re using these funds to build a U.S. healthcare system where employees can keep the same great benefits from job to job. Where health insurers can build brand loyalty and keep members long-term. And where the deepest pockets are incentivized to pay for preventative care and better customer service. Bottom line: We want to decouple health insurance from employment.

Back to Christina, her prenatal care, and exactly how Thatch is creating a better future for health benefits. 

Empowering Employees and Employers

With Thatch, employers set a budget and provide their team tax-free healthcare dollars to allocate the way that works best for their unique needs. Employees use Thatch to find insurance plans that cover their doctors, drugs, and costs directly. They can use their leftover balance to pay for other expenses like prescriptions, preventative care, or copays. It’s a radically better experience – made possible for the first time by a 2020 law called ICHRA — and it feels like magic compared to the old school benefits experience.

We use Thatch benefits for ourselves here at Thatch, of course. So when Christina ran into the roadblock with her previous plan, we were able to switch over to Thatch and find a pregnancy-friendly option with her selected doctor in-network. She enrolled in the plan and had her 20-week check-up just a few weeks ago – happy to say all is going well. 

The Future of Health Benefits: Decoupling from Employment

If the promise of better, cheaper healthcare sounds too good to be true, well, yes, for a while, it was. When my co-founder Adam Stevenson and I first started exploring the market, we found that ICHRA is painfully complex. Employees were navigating government websites and putting huge insurance payments on personal credit cards. Once again, a good idea was stymied by the intrinsic systemic complexity of U.S. healthcare. 

In order to make the premise work in the real world, Thatch leverages the latest innovations in fintech to build a user-friendly layer that gives both employers and employees a seamless experience. Our team hails from companies like Stripe, Humana, Ramp, and Rippling; we’re putting that experience to work to help employers streamline the financial infrastructure, while making it simple for people to access the right health plans, easily, with their tax-free and employer-sponsored benefits. 

It’s starting to work, and it’s only going to get better. In the last year, the price and quality of health plans on Thatch reached parity with group plans, as carriers compete for a record-breaking 21.3M Americans in the individual market. 

Today, the typical business on Thatch saves 20-30% on their healthcare costs after switching. As more customers join Thatch, those costs will continue to drop while coverage improves. Our customers are like the strand of straw in a thatch roof. Alone, they have little leverage. But bound together, they're strong: their buying power yields affordable individual plans with better coverage. 

Thatch should be the default platform every forward-thinking company uses to provide health and wellness benefits for their teams. Our value proposition is universal, with customers ranging from AI startups and family-owned small businesses to nonprofits and large enterprises with thousands of employees. If every business participated in our model, a coffee shop in Oregon could offer employees the same health benefits, at the same price, as Google. We have a lot of work ahead of us to get there, but we're excited to liberate healthcare coverage from employment and give people everywhere the freedom to choose their healthcare. That's what gets us up in the morning.

If that sounds good to you, please get in touch. Whether you’re an employer who’s fed up with the system, a broker who wants to present a new solution to your clients, or an employee who wants to be a force for change, we’d love to work with you.