Health benefits startup StretchDollar has officially launched, accompanied by a successful pre-seed funding round securing $1.6M. The company offers a practical solution for small employers looking to provide pre-tax funding for employee-owned health insurance. Initially operating in Illinois, Pennsylvania, Delaware, and Colorado, StretchDollar has set its sights on expanding to California, North Carolina, and Texas by the end of 2023.
Over 60 percent of the 5 million small businesses with fewer than ten employees in the United States do not currently offer health benefits. The primary obstacle cited is affordability, with the average cost of a family health plan surging to $22,400 in 2022, marking a 45-percent increase over the last decade.
Marshall Darr, Co-founder and CEO of StretchDollar, emphasized the challenges small businesses face: “Traditional small group health plans require extensive paperwork, strict minimum participation rates, and high premium costs. StretchDollar simplifies the process, allowing small businesses to support their employees while maintaining control of their benefits budget.”
The company offers a straightforward solution. In under ten minutes, small employers can establish a fixed pre-tax monthly stipend of their choice, which employees can allocate toward their health insurance premiums. The platform empowers employees to efficiently manage their benefits and receive expert guidance on selecting a health plan from the individual health insurance marketplace, thanks to StretchDollar’s licensed brokers. This approach to benefits management became possible through 2020 federal legislation that introduced Individual Coverage Health Reimbursement Arrangements (ICHRAs), enabling employers to use pre-tax dollars for employee healthcare expenses.
Kaiza Molina, Co-founder and COO of StretchDollar, further explained the benefits of their system: “StretchDollar eliminates the need for business owners to mediate between employees and health insurance. It allows employees to choose a health plan that suits their needs while providing business owners with more flexibility in their benefits budget.”
The launch is accompanied by the successful completion of a pre-seed funding round that secured $1.6M in investment. Notable investors in the round include Precursor Ventures, Elefund, v1vc, Kindergarten Ventures, and Westerly Ventures.