The open enrollment period for Medicare started on Friday, October 15th and will continue through early December. For the 60M+ Americans, this is a critial period where they can make changes to and add/drop coverage. For most Americans, navigating the 24,000+ options available is a difficult and arduous process without help. Chapter is a Medicare advisory platform that uses a blend of technology and a trained team of advisors to decipher all plans at a microscopic level, ensuring that members are able to enroll in the plans that are best suited for their needs based on cost and coverage. Typically, Medicare advisors are incentivized by insurance companies to enroll members and naturally, these advisors steer members towards plans that offer the best compensation; often creating a misalignment. Chapter’s advisors are all full-time employees that are not compensated directly based on commissions. Combining this dynamic with plan data that Chapter’s technology generates, members are confident that are receiving unbiased and impartial recommendations.
AlleyWatch caught up with Chapter CEO and Cofounder Cobi Blumenfeld-Gantz to learn more about the inspiration for the business, the company’s future plans, latest round of funding, which brings the total funding raised to $19M, and much, much more.
Who were your investors and how much did you raise?
This was a $17M Series A financing round. The investment was led by Narya Capital with participation from Susa Ventures, Maverick Ventures, XYZ Venture Capital, Core Innovation Capital, and Health2047 Capital Partners. Peter Thiel has also joined the company’s board of directors.
Tell us about the product or service that Chapter offers.
At Chapter, we have a simple commitment to consumers: it’s impossible to find better Medicare guidance or support anywhere else. How? Chapter searches every plan at an unprecedented level of granularity, and we precisely recommend the right plan for each person. On top of that, we hire and train our advisors to delight our members.
Our team has built and maintains a proprietary technology platform used by its advisors to search every Medicare plan nationwide, including Medicare Advantage, Medicare Supplements, and standalone Part D prescription plans.
Chapter not only supports Americans directly, but also the types of organizations they trust most, including non-profits, religious institutions, community groups, financial advisors, employers, and employee benefits organizations.
What inspired the start of Chapter?
We watched our parents attempt to navigate the maze of Medicare — nearly missing deadlines, filling out piles of paperwork, and ultimately enrolling in plans that were more expensive than comparable alternatives — and we knew there should be a better alternative. We’re re-building the experience by empowering our members with the tools and support they need to have the Medicare experience they deserve.
How is Chapter different?
Most Americans navigate Medicare alone or unintentionally use resources that limit their options and/or overcharge them. Medicare coverage is too important to get wrong: signing up late can result in lifetime penalties. Plans have such significant differences in benefits and premiums that it’s critical to search every single option. We help people save thousands of dollars so they can retire on their own terms.
Legacy Medicare brokers are not required to search a minimum number of plans, disclose the number they do search, or minimize financial incentives to favor particular plans. Legacy online tools suffer from similar issues. The Commonwealth Fund, a nonprofit research institution, has found that legacy online tools typically represent fewer than half of Medicare Advantage options. This is disturbing because people are not getting crucial information that offers them the best healthcare coverage at the most affordable costs.
What market does Chapter target and how big is it?
More than 60 million Americans are eligible for Medicare, with 10,000 new consumers becoming eligible each day. In fact, there will be an even greater rise in the US’s aging population, which underscores the need for more solutions tailored to older Americans. By 2030, over 20% of Americans will be older than 65. We started Chapter because we believe this generation deserves the most comprehensive healthcare coverage available at the most affordable cost.
What’s your business model?
Like most Medicare advisors, we earn fees paid by insurance carriers, which allows us to offer our services for free.
Unlike other Medicare advisors, however, we do not limit our recommendations to plans with which we have a relationship. This means that we recommend plans every day on which we earn no revenue.
To us, it’s crazy that this is not a legal requirement.
What are your post-COVID office plans?
We monitor guidelines from experts and will determine our re-opening plans based on their guidance. Our team continues to hire the best talent across a variety of functions including engineering, marketing, and business development. We are being careful in order to maintain the health and safety of everyone.
What was the funding process like?
Fundraising can be grueling. We spoke with many investors who decided not to invest.
What are the biggest challenges that you faced while raising capital?
Raising capital is difficult. We operate in a market that is both decidedly unsexy and poorly understood, which creates a layer of obscurity that we have to overcome. I know we have the right people in place and the technology to change the narrative. Medicare is complicated and it is important to millions of people in our country.
What factors about your business led your investors to write the check?
A traditional Medicare brokerage is a great business: it serves a large and growing market, it sells a product that most people need, and if brokers do their jobs well, brokers earn strong recurring revenue.
Yet, there remains a massive opportunity to improve the user experience and operational efficiency through technology, while better serving consumers and creating a long-term relationship.
A traditional Medicare brokerage is a great business: it serves a large and growing market, it sells a product that most people need, and if brokers do their jobs well, brokers earn strong recurring revenue.
Yet, there remains a massive opportunity to improve the user experience and operational efficiency through technology, while better serving consumers and creating a long-term relationship.
What are the milestones you plan to achieve in the next six months?
We are proud to recently announce that Chapter is a trusted partner of the National Council on Aging. As part of the partnership, Chapter has met NCOA’s Medicare Standards of Excellence. Chapter underwent a comprehensive vetting process that ensures an ethical, informative, and consumer-first experience for older adults seeking to maximize their Medicare coverage.
We are working with other large organizations and plan to announce more partnerships over the coming months. Our goal with each partnership is to ensure we continue to provide best-in-class service and care for our members.
In addition, we are continuing to hire talent across multiple functions very quickly including roles in business development, marketing, engineering, and finance.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Don’t limit your capital raising efforts to investors based in New York. Investors all over the country (and world) are excited to invest in companies in New York. Identifying sources of capital that are likely to invest is also really important: consider fund deployment cycles and investment themes to improve the chances of a good partnership.
Where do you see the company going now over the near term?
In the near term, we aim to be the most trusted resource for Medicare guidance and support.
What’s your favorite outdoor dining restaurant in NYC?
One of my favorite go-to restaurants is Ofrenda. Highly recommend it to anyone who has never been.
