Thatch Reaches $1 Billion Valuation With Healthcare Benefits Platform

Healthcare benefits platform Thatch raised $108 million at a $1 billion valuation as it expands its alternative approach to employer-sponsored health plans.

The funding round came from existing investors including The General Partnership, Index Ventures, General Catalyst and Andreessen Horowitz. The raise follows Thatch’s $40 million Series B round 17 months earlier, when the company was valued at $410 million.

Thatch targets rising employer healthcare costs

Founded in 2021 by Chris Ellis and former Stripe engineering executive Adam Stevenson, Thatch helps employers provide flexible healthcare benefits through an individual coverage health reimbursement arrangement, known as ICHRA.

The model lets companies give employees a fixed healthcare budget instead of selecting a single company-wide insurance plan. Workers can then choose from available health, dental and vision plans through Thatch’s marketplace.

The company’s growth comes as employers face increasing healthcare expenses. Mercer has reported that employer health benefit costs are expected to rise significantly in 2027, adding pressure on businesses to explore different approaches.

A marketplace approach to employee health plans

Under the ICHRA model, employers set a defined contribution for each employee rather than negotiating traditional group insurance contracts. Thatch uses artificial intelligence to recommend plans based on workers’ individual needs.

Employees who need broader coverage can use additional personal funds for more comprehensive plans. In contrast, those with fewer healthcare needs can choose lower-cost options and use remaining funds through a Thatch debit card for eligible healthcare expenses.

Thatch says the model gives employees more control over their healthcare choices while helping employers manage benefits costs without repeatedly renegotiating insurance agreements.

Competition grows around alternative healthcare benefits

Thatch is among several companies building around ICHRA, a framework introduced through federal regulation in 2020. Other startups operating in the space include Take Command, Remodel Health and Zorro.

Thatch said its annual recurring revenue has grown about sevenfold as employers adopt alternative healthcare benefits.