Health benefits platform Thatch reaches $1B valuation as healthcare costs surge

Thatch announced a new financing that values the company at $1 billion after a $108 million raise from its existing investors, which include The General Partnership, Index Ventures, General Catalyst and Andreessen Horowitz. The startup, launched in 2021 by Chris Ellis and former Stripe engineering executive Adam Stevenson, has reported rapid revenue growth: Ellis told TechCrunch Thatch's annual recurring revenue expanded by about seven times.

Thatch operates a marketplace built around an Individual Coverage Health Reimbursement Arrangement (ICHRA), a federal rule established in 2020 that has been recently rebranded as CHOICE. Rather than putting a workforce onto a single employer-negotiated plan, companies set a fixed pre-tax health allowance for each employee. Workers then choose from dozens of individual medical, dental and vision plans available on Thatch's platform.

The company layers data-driven recommendations on top of that marketplace, using AI to suggest plans tailored to an employee's needs. Employees who require extensive care can pay extra out of pocket for more comprehensive coverage, while healthier workers can select lower-cost plans and use remaining funds via a Thatch debit card for eligible expenses. Thatch positions this approach as a way for employers to control costs without repeatedly renegotiating with large carriers and to encourage insurers to compete for customers.

Thatch's growth comes as employers face rising healthcare expenses — with projections showing a more than 8% increase in 2027, the largest jump since 2003 — and amid stronger employee demand for newer treatments such as GLP-1 medications like Ozempic and Wegovy, which many traditional plans seldom cover. Thatch is among several startups leveraging the six-year-old regulation; competitors named in the reporting include Take Command, Remodel Health and Zorro.