Lumity raises $19M to reinvent health benefits

Health benefits startup seeks to save small- to mid-sized companies 15 to 20 percent

As the debate rages on about whether government should pay for health insurance coverage or individuals, at least some companies realize these are pointless discussions if health premiums keep rising anyway. 

Enter Lumity, which recently raised $19 million in new financing from DFJ, Social+Capital, True Ventures, and others, bringing its total financing to $33 million

San Mateo, Calif.-based Lumity focuses on helping consumers find the most affordable plans for their specific needs and targets companies with 100 to 1000 employees. 

Lumity (not to be confused with the financial consulting non-profit based in Chicago) uses complex data analysis to help companies and their employees choose an effective, fair, and clear benefits plan, as well as to guide employers in critical transitioning through PEO, PPO or HMO platforms.

The main difference between this startup and other cloud-based health benefits platforms like Collective Health, is that Lumity does not focus on self-insured employers.

Self-funded employers, says Aaron Huong, Lumity’s Head of Marketing and Strategic Accounts, have more access to medical data, so it's easier for them to manage their employees’ benefits. For other companies that are fully-insured, meaning they use outside insurance companies to provide health benefits, it's a bit opaque.  

“Many companies live in this black box,” says Huong. “Typically, [large companies] don’t have any visibility and don’t know whether $1 to $2 million a year for 150-200-person company is good value or not, given the anticipated healthcare costs. These companies normally pay 15-20 percent more per year than what they should be paying.”

How does it work?

The solution to over-insuring or under-insuring employees’ healthcare was developed by Lumity through an individualized approach. The startup forecasts the cost of healthcare for an employee based on his/her voluntary disclosure of supporting data, such as prescribed treatments. Huong says, most employees choose to share private information when they see that their insurance plans improve based on personal needs.

The Lumity team sees their mission as “improving the doorway to healthcare,” Huong says. Here, data scientists and tech engineers work alongside people from the healthcare benefits industry. This way, companies have access to experienced and trusted advisors who connect the employee, the health insurance company and the healthcare system. Huong says, “It’s that amalgamated model that essentially creates what we think an improved experience for fully insured employers and employees.”

Tariq Hilaly cofounded Lumity in 2014, after he left Motif Investments to take care of his wife, who was diagnosed with cancer. Finding himself on the receiving, rather than buying, side of healthcare, Hilaly felt frustrated with the system, trying to figure out what he and his wife were getting for their money. He partnered with Senthil Nagarajan to create a platform that ensures visibility between the employer and the employee in terms of healthcare benefits, specific to the personal needs of an employee and his/her dependents.

Lumity said its revenue soared 800% this past year.