This week, we were thrilled to share that Oak HC/FT is leading a growth funding round of more than $100M for Remodel Health, a tech and services platform that is designed to help employers of all sizes offer customized health insurance solutions for their employees. Remodel specializes in Individual Coverage Health Reimbursement Arrangements, or ICHRA, a segment of health insurance which lets employers give pre-tax dollars to their employees to buy their own health insurance via Affordable Care Act (ACA) plans. Remodel facilitates the ICHRA buying and selling process for stakeholders across the ICHRA ecosystem, including employers, employees, brokers and payors.
Remodel’s goal is to give employers, employees and payors the flexibility of individual plans but the simplicity of a group experience. With Remodel, employers can design benefit packages and set pre-tax allocations by employee class. Once an employer has set up the pre-tax allocations, an employee can use the Remodel platform to shop for insurance, enroll in their new plan and actually use their benefits. Remodel’s cost savings – compared to typical group plans, customers see an average savings of 30% and nearly 2.5x ROI on the dollars they spend on employee health coverage – and quality of service have resulted in an upwards of a 90% retention rate amongst its customers.
Oak’s investment in Remodel is a prime example of our approach to thesis-based investing. With a deep understanding of the existing gaps in the employer insurance market, we were focused on companies innovating around new financial and cost containment strategies that could result in meaningful ROI for small-and mid-size businesses that had previously relied on group insurance. We identified the emerging ICHRA segment as a part of this thesis-driven work. We found it compelling because of the flexibility and control it offered to employers in terms of managing YoY corporate spend on rising healthcare costs, the potential it offered to payors in terms of member retention and the individualization it offered to employees.
For employers, ICHRA creates savings by moving the costs associated with self-insuring employees over to the risk pools of state-wide exchanges. For employees, it not only allows flexibility in choice of plan (where someone with diabetes could select a diabetes specific coverage plan or a healthy member could choose an HSA plan that better meets their needs), but also allows for continuity of coverage, meaning the plan follows the employee to their new job – making it an ideal option for companies that operate across multiple state lines or in today's economy, where it’s not uncommon for employees to change employers every three to four years. Moreover, ICHRA is increasingly of interest to payors, as it diversifies their product offering to employers looking for alternative options to group and allows for cross-sell of other products.
For Oak, we like ICHRA because it is 1) a novel segment providing clear ROI, 2) rich with startups looking to leverage technology to bring down costs and offer new distribution and engagement opportunities, and 3) has the benefit of relatively new regulatory tailwinds (with the government expanding the employer mandate to include this offering for the first time in 2020).
Following the 2023 enrollment season, we felt even more conviction about the space, given payer enthusiasm, growth trends amongst small- to mid-size employers, and new market entrants. But, what we were looking for most was a company to partner with that had real scale and an exceptionally strong leadership team.
This is what led us to Remodel.
In a space with a lot of new companies emerging, Remodel stands out as a scaled business with a diverse product base, offering ICHRA, Wage+ and QSEHRA options to more than 100,000 lives. YoY growth has remained consistent at more than 175% for the past two years, and the company’s white glove service model is a key differentiator in the market, particularly given the complex customer experience of moving from a group insurance offering.
Remodel’s emerging broker GTM motion is also showing an impressive growth story that has us excited about the future for both the company and the broader ICHRA market. In 2024, the company made the deliberate move to focus more energy in building deep relationships with brokers to drive ICHRA conversion. Initiatives like ICHRA Academy and co-marketing efforts with payors have resulted in a meaningful growth trajectory.
From a leadership perspective, we are continually impressed and inspired by Austin and his approach to company building. Despite spending most of his career in the health insurance space, Austin remains a committed student and approaches every challenge with an open mind and a desire to innovate. His creativity in GTM approaches and ability to articulate a clear vision for not only Remodel, but the entire category will make him a thought leader in the ICHRA market. He is scrappy and deeply mission-oriented in a business where a humanistic approach is a real differentiator. We are confident that he will continue to build a breakout company.
And so, after a few years of deeply researching and investigating the space, we are humbled that Remodel chose to work with us to build this next chapter for not only themselves, but for the entire ICHRA industry. Remodel and the level of choice that ICHRA offers truly represents the future of health insurance.