Wellthie Files IPO Prospectus: Tackling Small Business Health Insurance Challenges with Innovative Tech Platform

“Since 2016, U.S. companies with 50 or more full-time employees have been required to provide health insurance coverage for their employees in accordance with relevant regulations; failure to do so will result in penalties.”

This is the enduring impact of the Patient Protection and Affordable Care Act, signed by President Obama in 2010. The regulation immediately drew significant attention from major U.S. employers. After all, many American companies, particularly small and medium-sized enterprises, still view employee health insurance as a major cost concern.

“Obamacare” is hailed as the most significant reform legislation in the U.S. healthcare system since Medicare was enacted in 1965. The primary objectives of the Affordable Care Act are to reduce healthcare costs, expand health insurance coverage, and improve the quality of care, with particular emphasis on imposing mandatory requirements on insurance plans for individuals and businesses.

It can be said that healthcare reform has ushered in a new era for U.S. health insurance, extending coverage to millions of Americans. However, when it comes to finding the right direction in this new era, small business owners often report facing more complex decisions under the new health insurance system. A 2015 survey by The Guardian, one of the largest life insurance companies in the United States, found that 61% of employers considered being fully prepared for the new health insurance system as one of their top priorities; yet only 40% believed they were adequately prepared. Furthermore, 60% of employers indicated that they needed administrative assistance related to the Affordable Care Act.

“It’s time to change the way small and medium-sized enterprises shop for daily needs and purchase insurance.” This is the slogan displayed on the official website of Wellthie, a health insurance advisory platform. Meanwhile, Sally Poblete, the company’s founder, stated that Wellthie offers China’s first and only small-group benefits marketplace connecting carriers, brokers, and small business owners.

Sally Poblete, the founder of Wellthie, was born into a family of physicians. Perhaps influenced by her upbringing, she pursued an MBA in Healthcare Management at the Wharton School of the University of Pennsylvania after graduating from New York University. Since then, Sally Poblete has embarked on an 18-year career in the U.S. health insurance industry. Notably, in addition to holding executive positions at multiple healthcare startups, she achieved significant success at Anthem, one of the largest health insurers in the United States, where she developed innovative, cost-effective insurance products. In January 2015, she was recognized as a Top Healthcare Reformer by Medical Marketing & Media.

Drawing on years of professional experience and deep insights into the health insurance industry, Wellthie has identified that small and medium-sized enterprises (SMEs)—a vital component of the U.S. economy—continue to face significant challenges in providing health insurance coverage to their employees. “For many SME employers, offering health insurance can be daunting due to prohibitive costs,” said Sally Poblete. “Yet today, small businesses account for 90% of all U.S. enterprises and employ nearly 55 million people. Eighty percent of small businesses rely on advice from insurance brokers to mitigate the financial burden of employee health coverage.”

Sally Poblete also highlighted the “four major myths” widely believed in the healthcare industry, stating that she aims to debunk them: “When small and medium-sized enterprise employers seriously consider providing valuable healthcare plans for their employees, they must recognize reality and distinguish it from these myths.”

The “Four Major Myths” That Sally Poblete Seeks to Debunk Are as Follows:

First, some employers consider employee health insurance to be expensive and therefore refuse to purchase it for their staff. In reality, all eligible employees can obtain coverage regardless of their health status. Meanwhile, under U.S. small group health plans, insurance premiums vary based on employee age, work location, and carrier. Furthermore, a wide range of health plan options is available to help reduce budgetary costs.

Secondly, Sally Poblete acknowledged the inherent complexities of the U.S. healthcare system, citing a recent study which found that 4% of Americans have limited understanding of basic healthcare knowledge. However, even for employers who have never previously offered employee benefits, unfamiliarity with medical terminology should not hinder their ability to ensure adequate coverage for their companies. Effectively leveraging existing resources is expected to help small business owners demystify health insurance.

Furthermore, some employers have reported that they may miss the Open Enrollment Period even when they wish to purchase insurance for their employees, although most insurers offer effective dates on the 1st or 15th of each month to enable access to new benefits.

Finally, employers generally believe that they would not provide insurance for employees unless required by law. Sally Poblete emphasizes that purchasing insurance is a strategy that benefits employees, their families, and the company as a whole, adding that “there is no such thing as a company being too small to offer benefits.”

Sally Poblete, an industry veteran, was no longer content with mere lip service. To thoroughly debunk the “myths,” she founded Wellthie, a health insurance technology company in New York, USA, in 2010, specializing in employee health insurance solutions for small and medium-sized enterprises.

Sally Poblete’s experience in the health insurance sector proved invaluable at this juncture, given the lack of scaled insurtech companies serving small and medium-sized enterprises in the United States.

She is well aware that U.S. small and medium-sized enterprise (SME) employers have a wide variety of health insurance options for their employees: small business owners can purchase coverage for their staff directly through insurance brokers or directly from insurance companies; they can also offer multiple plan options for employees to choose from, or provide salary increases earmarked specifically for the purchase of health insurance.

With so many options available, Sally Poblete’s primary consideration was how to streamline the online purchasing process to save employers time and costs. To truly modernize online procurement, she transformed Wellthie into a data-driven platform, investing significant effort in algorithmic technology.

On August 15, 2017, D. Orlando Keise joined Wellthie as the company’s Chief Technology Officer. With over 15 years of experience leading technology teams in the fintech industry, he previously oversaw marketing technology at prominent financial firms LearnVest and Northwestern Mutual. In this new role, he brings his fintech expertise to the insurtech sector, leveraging his background in building products with innovative technological solutions for Wellthie.

Alex Frommeyer, President of Beam Dental, a prominent dental insurance sales company, described Wellthie’s technology as “world-class.” Beam Dental is also partnering with Wellthie to drive the growth of its dental insurance business.

Of course, technology alone is insufficient to address the complexities of selecting medical insurance plans. Sally Poblete opted for a licensed broker business model, as it “can resolve any issues employers may raise in multiple ways.” In addition, Wellthie offers complementary services available free of charge on its website. For instance, Wellthie provides a plugin that explains health insurance terminology, helping users—typically small and medium-sized enterprise (SME) employers—understand and purchase health insurance plans.

Wellthie: An Introduction to Platform Operations

Specifically, Wellthie bridges the gap among small and medium-sized enterprise (SME) employers, insurance brokers, and carriers.

Employers can view the health plan carriers available in their area by entering basic business information, such as zip code and number of employees, on the Wellthie website. The Wellthie platform also automatically generates comparison charts. Once employers select a purchase plan, the platform automatically creates an account benefits package. Additionally, employers can directly contact licensed insurance brokers to complete online enrollment for both the company and its employees.

On the other hand, Wellthie provides insurance brokers with a technology and e-commerce platform, enabling them to offer clients options that best align with their specific preferences and needs, while also providing quotes, guidance, and enrollment services. Insurance brokers can simply refresh the page as needed to access real-time quotes and new insurance proposals, thereby reducing the time and effort spent on routine processes. Meanwhile, for some brokers, the user-friendly nature of the Wellthie platform allows them to market multiple product lines nationwide simultaneously, indirectly increasing their agency income.

Wellthie’s advanced algorithms also connect brokers and carriers. Carriers can leverage the platform’s extensive database and sophisticated data analytics systems to plan sales strategies and acquire new customers, while engaging agents to conduct multi-line insurance product sales through China’s only employee benefits marketplace. In fact, in the U.S. private insurance market, there are also insurers favored by small and medium-sized enterprises (SMEs), such as Aon Hewitt, Mercer, and Liazon, a subsidiary of Towers Watson.

Furthermore, Wellthie’s technology has also secured financial backing for the company. It completed seed funding rounds in 2014 and 2015, respectively, and closed a $5 million Series A financing round in April 2017, led by the renowned investment firm IA Capital Group, with participation from Aflac and Pacific 8 Ventures. In September of the same year, Wellthie completed a venture capital financing round.

To date, Wellthie has successfully partnered with national and regional carriers, including the well-known Independence Holding Company (IHC Group, NYSE: IHC) and major benefits provider Alliance Direct Benefits. Its tools provide technical support to insurance carriers in 20 states, and its online platform has generated hundreds of thousands of quotes. Wellthie is thus the only insurtech company in the United States that covers the nationwide small and mid-sized employee benefits market.

On October 16, 2018, Wellthie announced that it had been named to the inaugural InsurTech 100 list of technology pioneers transforming the global insurance industry.

InsurTech (insurance technology) is one of the largest and most significant sectors within FinTech (financial technology). Since 2015, as insurers and investors have come to recognize the profound impact of new digital models on the insurance industry, over $7 billion has been invested in InsurTech solution providers. As established financial institutions grapple with the challenges of efficiency-driven innovation and digital transformation, the InsurTech 100 was launched to highlight the 100 innovative companies that every leader in the insurance industry needed to know in 2019.

“We strive every day to create a thriving business ecosystem for small businesses, carriers, and brokers, driven by advanced technology and human empathy,” said Sally Poblete. “The Wellthie team is honored to be recognized on the InsurTech 100 list alongside other global insurance innovators.”

These outstanding companies were selected by a panel of industry experts who reviewed an analytical report on 637 insurtech firms prepared by the data and research company FinTech Global. The finalists were recognized for their innovative application of technology, typically addressing significant industry challenges or achieving cost savings and efficiency gains across the entire insurance value chain.

Undoubtedly, Wellthie is no exception; it serves as a potent remedy for the persistent challenge of “difficulties in insurance procurement for U.S. small and medium-sized enterprises.”

Employees of large enterprises (with more than 200 employees) can benefit from Medicare and Medicaid established in 1965, but employees of small businesses are not so fortunate. This is not because they cannot access health insurance; on the contrary, their willingness to purchase insurance may be strong. However, it must be clear that insurance carriers charge premiums sufficient to cover expected healthcare costs, administrative expenses, and sales costs. Due to the small number of participants, limited scale, and higher risk associated with small and medium-sized enterprises (SMEs), carriers find it difficult to spread fixed costs across such a small pool. Consequently, they add hundreds of dollars to each policy to mitigate adverse selection among SME employees. In contrast, employees of large enterprises do not need to worry about premium issues due to the absolute advantages of their employers.

Today, the invisible inequities caused by perfectly competitive markets are poised to be dismantled with the emergence of Wellthie. Beyond the anticipated removal of mandatory insurance requirements, small and medium-sized enterprises (SMEs) can access more affordably priced commercial health insurance plans on the Wellthie platform, free from concerns about implicit discrimination against SMEs in the insurance market. Meanwhile, carriers and brokers willing to assume risks can also enhance their performance through this platform.

Moreover, on October 2, 2018, Wellthie announced a partnership with OneDigital Health and Benefits, the largest U.S. company specializing in employee benefits and human resources, to further advance its digital insurance offerings.

OneDigital specializes in comprehensive advisory services, offering market-leading solutions and operating 74 offices across the United States. Amid intensifying mergers and acquisitions among digital brokerages and a growing millennial workforce, the 17-year-old company has pledged to “provide employees with additional benefits and human resources support.” Through this partnership, OneDigital’s nationwide team of advisors can effectively leverage Wellthie’s national small-business benefits marketplace to deliver enhanced employee benefits to its small business clients.

“I look forward to our team rolling out the Wellthie platform across China,” said Julie Cape, Executive Vice President of Customer Service and SMB Markets at OneDigital. “Providing a single, robust platform for our small and medium-sized business clients will help drive efficiency across our organization and deliver superior service to this underserved segment.”

(Compiled by Ning Chen)