Thatch raises $40M to give employees more control of their health care choices

Summary

Thatch, a startup that aims to transform the health insurance experience for employers and employees alike, has raised $40 million in a Series B round of funding, it tells TechCrunch exclusively. Index Ventures led the financing, which included participation from existing backers Andreessen Horowitz (a16z), General Catalyst, SemperVirens, PeopleTech Partners, The General Partnership, and new investor ADP Ventures. In total since its October 2021 inception, Thatch has raised $84.5 million in equity funding. While the San Francisco-based startup declined to reveal its new valuation, co-founder Adam Stevenson told TechCrunch that it was about three times higher than its Series A (Thatch raised $35 million in a Series A round led by General Catalyst in February of 2024). Thatch helps employers offer Individual Coverage Health Reimbursement Arrangement (ICHRA) to employees. ICHRA is a relatively new insurance option, in effect as of 2020. So what’s the difference between an ICHRA and HRA? A typical HRA exclusively covers out of pocket medical expenses such as therapy, braces, and prescriptions. The ICHRA allows employers to also use the funds to cover individual medical insurance. “So imagine each employee gets $1,000 a month — one employee might buy a Kaiser HMO plan for $800 a month and spend the remaining $200 month on therapy, while another employee might spend $1,000 a month fully on a United PPO plan. Previously, HRAs could not pay for insurance,” CEO and co-founder Chris Ellis explained. Thatch hosts a marketplace that allows employees to choose from different health insurance options, as well as offering a debit card that allows them to spend their remaining balance. Employees in turn use that budget through Thatch to choose healthcare plans they want, including medical, dental, and vision. If there are leftover funds, they can use that to pay for treatment costs. With Thatch, if an employee grows unhappy with one insurance carrier, they can switch, the founders ...