[00:10] Andy Karuza: Good afternoon everybody and welcome to another Nacho Tuesday. Today I have Wyatt here with Molli Health. Without further ado, we'd love if you could introduce yourself and what you guys do over there.

[00:20] Wyatt Stokesberry: Thanks, Andy. Appreciate you having me on, excited to be here. I'm the CEO and co-founder of Molli Health. At Molli, we build health insurance for independent professionals. What independent professionals really means for us is people who are not on W-2 sponsored health insurance, whether that's an independent contractor like a 1099, a small business owner, and everything in between.

[00:43] Andy Karuza: Nice. How did you start Molli Health? What did you do before this?

[00:46] Wyatt Stokesberry: Great question. I spent the last five years building funded health plans for small to medium-sized employers, from 5 to 250 employees. I got a really good understanding and background on how to actually build sustainable, cost-contained health plans. I left that company about two years ago and was a contractor myself. I went to the ACA marketplace to get insurance, and I realized how poor it actually was, how high the prices were, how bad the deductibles were, and how bad the networks were.

So, I leveraged my background in creative level funding and found a really creative solution that allows us to offer higher quality, lower cost benefits to 1099s and independent contractors. I have been working on this for about a year and a half now, and Andy, we actually launched last month. Very exciting.

[01:33] Andy Karuza: How does the startups benefits landscape look today and where do you think it's going to be in five years after we have more innovative companies like yourself coming into the space?

[01:46] Wyatt Stokesberry: I think there are three different landscapes, Andy. First, you have large employers—employers over 50 who are required to offer benefits—that's its own category. The middle ground is anywhere between 2 to 50 employees where they don't have to offer benefits, but there are increased benefits for their employees and increased retention if they do actually offer them. Then there's the space that's sub-2, which is all independent contractors, people who usually work for themselves, and that's a beast on its own.

Right now we're sitting in that independent space, supporting those independent contractors and businesses of one. But the landscape is more similar between the middle of the pack and the individuals where ICHRA is becoming a thing. ICHRA is the defined contribution model where a small employer will give their employees a set dollar amount to go out and buy insurance. This is very similar to the independent space where the individual is making the decision on the purchase of insurance compared to the employer making that decision for all of their employees.

Currently, it sits in the ACA marketplace for independent contractors, which is very outdated, very high cost, and very low quality. In the SMB space, you have ICHRA models and more of these defined contribution models really hitting that landscape and offering a differentiated, independent solution that allows employees to pick benefits that best fit their needs.

[03:15] Andy Karuza: Why are benefits so important, not just considering it as a cost center, but as a growth lever in terms of attracting talent, retaining talent, and ensuring that they have a high level of performance?

[03:26] Wyatt Stokesberry: Offering benefits to an employee is a huge retention lever. The startup space is a little bit different. You have a lot of younger individuals who still might be on their parents' insurance or who really don't value insurance that much at all. But yes, it's obviously a great retention lever.

When my co-founder was leaving IBM, the HR administrator sat down with him and said, "Hey, just so you know, by leaving IBM, you're going to lose your health insurance benefits." That's a scary point for a lot of people. Obviously, my co-founder didn't really care since he doesn't really use his insurance at all, but you think of those families where they don't see any other solution for insurance outside of an employer. I think how the current health insurance landscape is set up really disincentivizes people to start their own businesses.

[04:16] Andy Karuza: That's a great point. What are some of the unique challenges that startups face when offering benefits compared to larger companies that might have more purchasing power? And because of this, how should they think about designing their benefits programs?

[04:29] Wyatt Stokesberry: Obviously, it has to make sense for you as a smaller employer. Being able to actually have the revenue and the dollars to offer benefits is huge. You don't want to just offer benefits you can't afford. But outside of that, just like you said, you have less buying power and less negotiating power. So you're really set with fully insured plans that are prepackaged by some of the large carriers, and that's really why ICHRA has been taking off. It's a tool that allows these employers to give a set contribution amount to their employees to then go purchase their own insurance.

[05:01] Andy Karuza: What's the most misunderstood aspect of employee health benefits, especially when it pertains to startups?

[05:07] Wyatt Stokesberry: Good question. I think there are more options out there than people realize. For example, Kaiser has a partnership with YC where they offer their platinum plan for a substantially discounted rate to all the YC companies. I think one of the big shifts currently happening is the access to information. It's a lot easier to get creative around your health insurance leveraging different tools like ChatGPT and other LLMs.

[05:37] Andy Karuza: ChatGPT, never heard of that as an option—just kidding! How does a startup determine what the right level of benefits is given its stage? Let's say a company of 0 to 10 employees, or another 10 to 100. How do you structure those benefits differently depending on the size of your company or if you're a one-man shop?

[06:05] Wyatt Stokesberry: If you have over 50 full-time employees you have to offer insurance, so I'm not even going to talk on that. In that sub-50 space, it really depends on the group. It depends on the revenue, if you can afford benefits, and where you're at regionally. Health insurance is a very segmented market; what works in California is not working in Florida. For example, Kaiser's not in Florida.

It also depends on the type of employees. Is it a younger population? Is it an older population? Do you have it in your budget? Andy, there's no silver bullet to insurance. I'd say one of the best things you can do as a smaller employer is find a very strong benefits consultant, someone who understands the landscape and has your best interests in mind. They're not seeing you as a dollar sign, they're seeing you as their partner. A good consultant doesn't structure their commission as a per-employee, per-month fee. It's more of a consulting arrangement where they charge a set amount for a specific size of employer.

[07:13] Andy Karuza: In the past, before you guys came around, what were some of the insurance providers that you felt were doing it right?

[07:22] Wyatt Stokesberry: I don't think there are any providers or payers that are really doing it right. You have Oscar, who is providing really good member-facing technology, but they have the highest claims denial rates nationwide. The market's moving all the time. You have payers pulling in and out of different markets. There is no silver bullet.

The best thing you can do is work with a really good benefits consultant to understand your options, and also leverage ChatGPT and other LLMs to fully understand what's out there. Make sure that when you're making a benefits decision for a small employer, all the employees are in the room for a strategy session: "What do we want to include? Do we want mental health? Do we want telemedicine?" Weigh the cost versus quality.

[08:11] Andy Karuza: Do you guys partner with these advisors or consultants as well? Is it kind of a value add for the onboarding process for your customers?

[08:19] Wyatt Stokesberry: Absolutely. We have some pretty strong benefits consultants we love to connect our members and small groups with.

[08:27] Andy Karuza: What are some benefits that are great besides traditional medical or dental? What are some innovative ones that you've seen?

[08:40] Wyatt Stokesberry: The two biggest right now are mental health and virtual direct primary care. People are working from home a lot more than they were 5 to 10 years ago, and they want access to more virtual solutions. Virtual mental health and virtual direct primary care, allowing you to see these physicians same-day from the comfort of your home, is a big value add.

Then also gym memberships and other health stipends. For example, we give all of our employees $500 a month to spend on benefits and gym memberships through HSAs. Using a lot of these creative, forward-thinking tech platforms to keep your members happy is very valuable.

[09:23] Andy Karuza: For startups hiring contractors, remote employees, or full-time employees, have you seen any difference in how they design their benefits? Which benefits tend to be more attractive?

[09:55] Wyatt Stokesberry: It's hard if you have a lot of remote employees. Health insurance and providers are very segmented, so what's working in Florida might not work in Texas. The defined contribution model is where the small group market is going. The employer gives the employee a set dollar amount to go shop for their own benefits. If they want health insurance, awesome. If they just want dental and vision, or an accident policy, they can always buy it themselves.

I don't know if ICHRA is the end-all be-all solution just because it's still propped up on lower quality ACA marketplace plans, but the idea of a defined contribution benefits card is what I'm super bullish on. It enables people to choose plans that best fit their needs.

[10:42] Andy Karuza: People like flexibility at the end of the day. Nobody likes anything forced on them.

[10:46] Wyatt Stokesberry: At my past employer, when we were working with employers of 50 to 250 employees, the employees didn't really see it as their benefits. They saw it as benefits chosen for them by the executive team. This ICHRA model and defined contribution model flips that script and makes it feel like, "I'm buying this health insurance because it's best for me."

[11:12] Andy Karuza: Do you see a lot more companies going in that direction?

[11:15] Wyatt Stokesberry: Absolutely. One thing to add there too, is you remove the administrative burden of offering health insurance. That HR manager no longer has to deal with open enrollment and answer all these member questions. They simply give that dollar amount and the member chooses their own plan.

[11:38] Andy Karuza: How do founders balance the cost of benefits during a growth phase? Let's say they're running out of cash and have to cut burn. Is cutting benefits a complete no-go, or what should founders consider?

[11:55] Wyatt Stokesberry: Every situation is very different. If you're offering benefits and then you have to pull them back, obviously that's going to cause a lot of issues. But a lot of the time, people aren't really joining early-stage startups for benefits. If you're joining a 5 to 10 person team, the health benefits probably won't be very strong and you'll probably be purchasing your own benefits.

[12:26] Andy Karuza: They're betting more on the company and hoping that their equity turns into something at the end of the day. What metrics should you track to ensure that your benefits program is actually delivering ROI?

[12:49] Wyatt Stokesberry: The biggest thing is just enrollment—that people are actually enrolling in the product. Also, these teams are small enough that the feedback is there. If people like their benefits, they'll be very vocal about it. There's no real quantitative metric outside of enrollment percentage.

[13:51] Andy Karuza: How can benefits be used as a culture building aspect? You mentioned gym benefits; is there anything else that can be leveraged?

[14:09] Wyatt Stokesberry: Wellness stipends and gym memberships. You can even gamify it. There are companies out there providing gamification where if you get your preventative care, you get access to a Whoop or an Oura ring. It incentivizes members to be proactive, healthy, and drive down the cost of insurance and care.

[14:34] Andy Karuza: What about benefits trying to get employees outside or doing something active together? It could be getting them a membership to a pickleball league.

[15:02] Wyatt Stokesberry: HSAs are very strong right now and we're seeing them expanded to different atmospheres. You can use your HSA dollars to buy an Eight Sleep mattress, and I think there's even a world where HSA benefits expand to ski and snowboarding passes, or pickleball memberships.

[15:26] Andy Karuza: Does your platform cover just the US, or is it international?

[15:36] Wyatt Stokesberry: We're just US. International benefits versus US benefits are very different. A lot of international benefits are mainly government-sponsored, and maybe 2% is private white-glove insurance, so it's a completely different landscape.

[15:57] Andy Karuza: As startups scale rapidly, how should their benefits evolve from early stage to later stage?

[16:15] Wyatt Stokesberry: Once you hit 50 lives you have to offer insurance, so that's the enterprise level. You're really handcuffed sub-50, especially if you have a constantly moving population from a geographical standpoint. Once you hit 50 lives you should be able to build a pretty sustainable health plan, leveraging level-funding and self-funding mechanisms, assuming you find a strong benefits consultant to help you do that.

[16:48] Andy Karuza: Where do you see everything three to five years from now in terms of healthcare? Do you see a digitized approach or specific benefits becoming more popular?

[17:11] Wyatt Stokesberry: One of the most interesting things to look at over the next five years will be AI. How insurance companies leverage AI, not just on the provider side but on the member-facing side to help members be smarter consumers. The system has been designed to be confusing and opaque, and AI solves that opaqueness.

I also think macro-level benefits are going to get more creative. The current administration is working on passing bills that would allow people to band together and buy insurance together. As more creative solutions come out, the landscape will get better for independents and employers with less than 50 employees. Also, care delivery will only get better as virtual direct primary care clinics pop up left and right.

[18:55] Andy Karuza: Do you feel like the cost of healthcare might be deflationary in the future given the advances in AI and robotics? Will we be able to deliver better care for cheaper?

[19:10] Wyatt Stokesberry: You would think so, but if you look at the technological advancements over the last 10 years, the cost of care and insurance has only gotten worse. So I don't know if AI is the thing that can flip that and make the cost go down. I don't think so based on what's happened in the past, but we'll have to see.

[19:39] Andy Karuza: What's one piece of advice you'd give a founder when they're first starting out and setting up their benefits program?

[19:48] Wyatt Stokesberry: Talk to your employees and understand what they want. Do they want health insurance, or do they just want gym memberships? Find a good consultant to help you build a plan and scale it as your membership grows. It's really about being communicative with your team members.

[20:13] Andy Karuza: What mistakes do startups make that could cause issues later on in terms of compliance or costs going out of control?

[20:41] Wyatt Stokesberry: Trying to do it yourself when you don't understand the landscape. Offering a non-compliant health plan is a big issue I've seen. It goes back to working with a very strong broker that is regionally based, understands your employees, and knows the specific geographical region.

[21:13] Andy Karuza: What is the single biggest benefit innovation that under-resourced startups can leverage today to punch above their weight and compete for talent?

[21:28] Wyatt Stokesberry: PEOs are great—being able to group a bunch of employers together to purchase insurance using the law of large numbers. I'm also really bullish on virtual direct primary care. You can see a doctor same-day and get prescribed medications for free, and it's less than $50 per employee per month. Leveraging HSA dollars and gym memberships—leveraging things that people actually want.

[21:59] Andy Karuza: Tell us more about some of the features that Molli Health offers.

[22:09] Wyatt Stokesberry: We have access to a nationwide PPO network. Based on geography, we're up to 20% cheaper than the ACA marketplace. We're leveraging AI—not to decline claims, but to provide member-facing tools to better understand your benefits. What's covered, finding in-network providers, knowing what medications are covered. Providing members with really strong tools to support their journey in care.

[22:45] Andy Karuza: What's next for Molli Health?

[22:50] Wyatt Stokesberry: We're launching another network in the next two months that should be 10 to 15% cheaper than our current offering. We're just trying to stay ahead of the market, understand the ACA and SMB spaces, and stay on the cutting edge of all these different AI tools coming out.

[23:15] Andy Karuza: Where can people learn more about your company and try it out today?

[23:22] Wyatt Stokesberry: You can find us at mollihealth.com. We're also on Twitter and LinkedIn as Molli Health—Molli with an "I" by the way.

[23:33] Andy Karuza: I was going to say that actually! Well Wyatt, great getting on with you today. Really appreciated learning more about this industry and your company. Looking forward to seeing what you guys do next, and definitely looking forward to seeing you in San Francisco. So again that's mollihealth.com, Molli with an I.

[23:55] Wyatt Stokesberry: Yes sir. Thanks for having me, Andy. Looking forward to seeing you in person in San Francisco.

[24:00] Andy Karuza: Likewise. Sounds good bud, take care. Bye

[09:23] Andy Karuza: For startups hiring contractors, remote employees, or full-time employees, have you seen any difference in how they design their benefits? Which benefits tend to be more attractive?

[09:55] Wyatt Stokesberry: It's hard if you have a lot of remote employees. Health insurance and providers are very segmented, so what's working in Florida might not work in Texas. The defined contribution model is where the small group market is going. The employer gives the employee a set dollar amount to go shop for their own benefits. If they want health insurance, awesome. If they just want dental and vision, or an accident policy, they can always buy it themselves.

I don't know if ICHRA is the end-all be-all solution just because it's still propped up on lower quality ACA marketplace plans, but the idea of a defined contribution benefits card is what I'm super bullish on. It enables people to choose plans that best fit their needs.

[10:42] Andy Karuza: People like flexibility at the end of the day. Nobody likes anything forced on them.

[10:46] Wyatt Stokesberry: At my past employer, when we were working with employers of 50 to 250 employees, the employees didn't really see it as their benefits. They saw it as benefits chosen for them by the executive team. This ICHRA model and defined contribution model flips that script and makes it feel like, "I'm buying this health insurance because it's best for me."

[11:12] Andy Karuza: Do you see a lot more companies going in that direction?

[11:15] Wyatt Stokesberry: Absolutely. One thing to add there too, is you remove the administrative burden of offering health insurance. That HR manager no longer has to deal with open enrollment and answer all these member questions. They simply give that dollar amount and the member chooses their own plan.

[11:38] Andy Karuza: How do founders balance the cost of benefits during a growth phase? Let's say they're running out of cash and have to cut burn. Is cutting benefits a complete no-go, or what should founders consider?

[11:55] Wyatt Stokesberry: Every situation is very different. If you're offering benefits and then you have to pull them back, obviously that's going to cause a lot of issues. But a lot of the time, people aren't really joining early-stage startups for benefits. If you're joining a 5 to 10 person team, the health benefits probably won't be very strong and you'll probably be purchasing your own benefits.

[12:26] Andy Karuza: They're betting more on the company and hoping that their equity turns into something at the end of the day. What metrics should you track to ensure that your benefits program is actually delivering ROI?

[12:49] Wyatt Stokesberry: The biggest thing is just enrollment—that people are actually enrolling in the product. Also, these teams are small enough that the feedback is there. If people like their benefits, they'll be very vocal about it. There's no real quantitative metric outside of enrollment percentage.

[13:51] Andy Karuza: How can benefits be used as a culture building aspect? You mentioned gym benefits; is there anything else that can be leveraged?

[14:09] Wyatt Stokesberry: Wellness stipends and gym memberships. You can even gamify it. There are companies out there providing gamification where if you get your preventative care, you get access to a Whoop or an Oura ring. It incentivizes members to be proactive, healthy, and drive down the cost of insurance and care.

[14:34] Andy Karuza: What about benefits trying to get employees outside or doing something active together? It could be getting them a membership to a pickleball league.

[15:02] Wyatt Stokesberry: HSAs are very strong right now and we're seeing them expanded to different atmospheres. You can use your HSA dollars to buy an Eight Sleep mattress, and I think there's even a world where HSA benefits expand to ski and snowboarding passes, or pickleball memberships.

[15:26] Andy Karuza: Does your platform cover just the US, or is it international?

[15:36] Wyatt Stokesberry: We're just US. International benefits versus US benefits are very different. A lot of international benefits are mainly government-sponsored, and maybe 2% is private white-glove insurance, so it's a completely different landscape.

[15:57] Andy Karuza: As startups scale rapidly, how should their benefits evolve from early stage to later stage?

[16:15] Wyatt Stokesberry: Once you hit 50 lives you have to offer insurance, so that's the enterprise level. You're really handcuffed sub-50, especially if you have a constantly moving population from a geographical standpoint. Once you hit 50 lives you should be able to build a pretty sustainable health plan, leveraging level-funding and self-funding mechanisms, assuming you find a strong benefits consultant to help you do that.

[16:48] Andy Karuza: Where do you see everything three to five years from now in terms of healthcare? Do you see a digitized approach or specific benefits becoming more popular?

[17:11] Wyatt Stokesberry: One of the most interesting things to look at over the next five years will be AI. How insurance companies leverage AI, not just on the provider side but on the member-facing side to help members be smarter consumers. The system has been designed to be confusing and opaque, and AI solves that opaqueness.

I also think macro-level benefits are going to get more creative. The current administration is working on passing bills that would allow people to band together and buy insurance together. As more creative solutions come out, the landscape will get better for independents and employers with less than 50 employees. Also, care delivery will only get better as virtual direct primary care clinics pop up left and right.

[18:55] Andy Karuza: Do you feel like the cost of healthcare might be deflationary in the future given the advances in AI and robotics? Will we be able to deliver better care for cheaper?

[19:10] Wyatt Stokesberry: You would think so, but if you look at the technological advancements over the last 10 years, the cost of care and insurance has only gotten worse. So I don't know if AI is the thing that can flip that and make the cost go down. I don't think so based on what's happened in the past, but we'll have to see.

[19:39] Andy Karuza: What's one piece of advice you'd give a founder when they're first starting out and setting up their benefits program?

[19:48] Wyatt Stokesberry: Talk to your employees and understand what they want. Do they want health insurance, or do they just want gym memberships? Find a good consultant to help you build a plan and scale it as your membership grows. It's really about being communicative with your team members.

[20:13] Andy Karuza: What mistakes do startups make that could cause issues later on in terms of compliance or costs going out of control?

[20:41] Wyatt Stokesberry: Trying to do it yourself when you don't understand the landscape. Offering a non-compliant health plan is a big issue I've seen. It goes back to working with a very strong broker that is regionally based, understands your employees, and knows the specific geographical region.

[21:13] Andy Karuza: What is the single biggest benefit innovation that under-resourced startups can leverage today to punch above their weight and compete for talent?

[21:28] Wyatt Stokesberry: PEOs are great—being able to group a bunch of employers together to purchase insurance using the law of large numbers. I'm also really bullish on virtual direct primary care. You can see a doctor same-day and get prescribed medications for free, and it's less than $50 per employee per month. Leveraging HSA dollars and gym memberships—leveraging things that people actually want.

[21:59] Andy Karuza: Tell us more about some of the features that Molli Health offers.

[22:09] Wyatt Stokesberry: We have access to a nationwide PPO network. Based on geography, we're up to 20% cheaper than the ACA marketplace. We're leveraging AI—not to decline claims, but to provide member-facing tools to better understand your benefits. What's covered, finding in-network providers, knowing what medications are covered. Providing members with really strong tools to support their journey in care.

[22:45] Andy Karuza: What's next for Molli Health?

[22:50] Wyatt Stokesberry: We're launching another network in the next two months that should be 10 to 15% cheaper than our current offering. We're just trying to stay ahead of the market, understand the ACA and SMB spaces, and stay on the cutting edge of all these different AI tools coming out.

[23:15] Andy Karuza: Where can people learn more about your company and try it out today?

[23:22] Wyatt Stokesberry: You can find us at mollihealth.com. We're also on Twitter and LinkedIn as Molli Health—Molli with an "I" by the way.

[23:33] Andy Karuza: I was going to say that actually! Well Wyatt, great getting on with you today. Really appreciated learning more about this industry and your company. Looking forward to seeing what you guys do next, and definitely looking forward to seeing you in San Francisco. So again that's mollihealth.com, Molli with an I.

[23:55] Wyatt Stokesberry: Yes sir. Thanks for having me, Andy. Looking forward to seeing you in person in San Francisco.

[24:00] Andy Karuza: Likewise. Sounds good bud, take care. Bye.