Originally published by Fierce Healthcare on August 31, 2022
It's estimated that 10,000 people turn 65 every day, and most of these seniors have to navigate the complex maze of available Medicare coverage.
"The hard part is there are literally 50 plans for you to choose from. Naturally, people go to a broker to help them find a plan that's right for them. And while they are some great brokers out there, the majority of them, unfortunately, just recommend the plan that pays them the most commission instead of what's right for seniors. That's the core problem in the industry," Daniel Petkevich, founder and CEO of Fair Square Medicare, said in an interview.
He added, "I saw my parents have this experience, so I decided to build the brokerage I wish they had."
Petkevich launched Fair Square Medicare in 2020 to help older adults find health insurance plans to best fit their healthcare needs. An alum of the YCombinator startup accelerator, the company leverages technology to provide better services for a new generation of seniors who are used to a seamless digital customer experience.
"I wanted to build a brokerage that was tech-enabled and, more importantly, obsesses over the customer," he said.
Fair Square Medicare started mainly as a virtual Medicare brokerage that enrolls seniors in the plan that fits best. The company makes recommendations without regard to commission, Petkevich said, which differentiates it from many traditional or publicly traded brokerages.
The startup is now focused on building out a full-service senior care navigation platform that includes many more digital services.
The tech-enabled concierge healthcare platform recently secured $15 million in series A funding to help fuel its growth and build out new capabilities. The round was led by Define Ventures with additional participation from Slow Ventures, YCombinator and angel investors. The company has raised $19 million to date.
Fair Square Medicare currently operates in 49 states and Washington, D.C.
The company plans to use the new investment to launch new services to help seniors find and schedule appointments with preferred providers, set up annual preventive health and dental services and find the lowest available price on their prescriptions.
Fair Square Medicare also plans to roll out digital health services that help seniors manage chronic conditions and access on-demand consultations with a clinician.
A Kaiser Family Foundation study found that nearly 60% of Medicare enrollees don't review or compare their coverage options annually because of overwhelming choices—figures that get worse for older beneficiaries and those with poorer health.
Many consumers over the age of 65 struggle to evaluate which Medicare plan is right for them, often turning to traditional insurance brokerage firms that are incentivized to recommend plans with the highest commissions. As a result, they'll enroll in the wrong plan and end up switching in a year, which is one reason some large public brokerage firms experience customer churn rates above 40%, Petkevich said.
Fair Square Medicare uses algorithms to sort and present the most relevant Medicare plans based on seniors' budgets and preferences, focusing on educating seniors instead of selling to them. The platform also includes a web portal that allows them to take full advantage of their available benefits.
That helps build trust with seniors, said Chirag Shah, partner at Define Ventures.
"When you prioritize the long-term relationship with the customer over potential short-term financial gains, they'll trust you with more of their health. Fair Square Medicare's model builds trust with seniors, because it treats them like family. That's the recipe for sustainable growth, which is why we're investing in Fair Square Medicare's future," Shah said.
Many of the company's customers are enrolled in lower-commission Medicare Supplement plans, Petkevich said.
Fair Square Medicare says it retains more than 90% of its customers and has a net promoter score (NPS) of 95. The average NPS for insurance brokers in the U.S. was 34 in 2021 and has ranged to as low as 9 over the last decade, company executives said.