StretchDollar, a health benefits company, has raised $6 million in funding to support small businesses, the company announced Tuesday.
San Francisco-based StretchDollar offers an ICHRA-focused model (Individual Coverage Health Reimbursement Arrangements), which allows employers to provide their employees pre-tax funding so they can buy individual insurance plans. Through StretchDollar’s platform, small businesses can fill in basic info and pick a monthly pre-tax allowance. They can then invite their employees to join the platform, and the pre-tax dollars are sent monthly from the business’ bank account to the employees.
“A traditional small group health plan often takes 100+ hours to set up and requires minimum employee participation of 50% or more along with other strict requirements,” said Marshall Darr, co-founder and CEO of StretchDollar, in an email. “This process also involves a business owner effectively deciding which hospitals their employees can use, which providers they can see, and even what medications the employees are going to have access to. It’s a lot to ask of a small business owner. We’ve built a platform designed to simplify everything, while finally giving employees choice.”
The seed funding was led by Fika Ventures and Oscar Health and included participation from Precursor Ventures and Springbank. It follows a $1.8 million pre-seed round from last fall.
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“Fika Ventures is thrilled to back StretchDollar’s mission to democratize healthcare access for small businesses through their innovative ICHRA platform that transforms a painful 100+ hour process into a 10-minute setup,” said Tianxiang (TX) Zhuo, general partner with Fika Ventures, in a statement.
With the funding, StretchDollar will expand its self-service platform, according to the announcement.
In the U.S., there are 5 million businesses with fewer than 10 employees, according to Darr. In 2010, 60% of these businesses provided health benefits to their employees, but by 2023, that figure dropped to 40%. This decrease isn’t because small businesses don’t want to provide health benefits, but because managing health benefits is complicated, Darr said.
In response, the ICHRA space has been picking up steam. According to the HRA Council, ICHRA adoption increased by 29% between 2023 and 2024. And StretchDollar isn’t the only company supporting this trend: other companies that help employers administer ICHRAs include Gravie and Take Command. Oscar Health has also been a major advocate for ICHRAs.
“The ICHRA space has received a lot of attention lately due in large part to a substantial development we’re seeing in the market,” Darr said. “Health insurance carriers are pulling out of the small group market leaving small businesses with few options. Humana and Cigna have all removed their small group offering entirely. Other carriers, like UnitedHealth and Aetna, have scaled them back substantially. In its place, companies like Oscar and Centene, are pivoting to the marketplace and expanding their individual health insurance options.”
Darr added that looking ahead, StretchDollar hopes to take on other areas in the health benefits space that small businesses have traditionally struggled to offer, such as vision, dental, retirement, life and disability benefits.
Photo: sorbetto, Getty Images
