Inside the world of marketplace insurance (Obamacare/ACA) there are many companies…
This article is about one of the youngest and fastest growing, Friday Health Plans.
Just under 2 years ago, they had over 330,000 members and $1.95 billion in gross premium revenue. At the time, they had also raised over $120 million in funding.
Today, they have pulled out of all the states they were in and are no longer are in operation selling state regulated health plans, effectively shut down.
With everything seeming to go so well…what happened?
Contents
What was Friday Health Plans?
Friday was a health insurance company based in Denver, Colorado that offered affordable health coverage for individuals and families through Obamacare/ACA. Their plans were found on the Health Insurance Marketplace and were compliant with the Affordable Care Act.
They were one of the newest companies in the health insurance world. Friday insurance was founded in 2015, just 9 years ago! Founded by Sal Gentile and David Pinkert, they took over a Colorado based insurance company and shortly after that they started selling plans through the marketplace.
Did Friday Health Plans shut down?
As of 2024, Friday health does not sell any marketplace insurance anymore and is effectively shut down. Friday Health has gone out of business following a failure to secure additional capital that was needed. In a statement on their own website, they said:
“Unfortunately, Friday has been unable to scale our financial infrastructure to match the pace of our growth and secure the additional capital required to run our business.”
Prior to this statement, Friday Texas plans were already starting to be pulled. After this, Friday insurance plans were terminated starting July 31, 2023, for Georgia, and for the rest of the states the plans were terminated on August 31, 2023.
As stated earlier, they had over 330,000 members. What happened to all of them? Did they exit out safely? Let’s find out.
What happened to the policyholders of Friday Health Plans after it shut down?
At its peak, Friday Health had over 330,000 active members covered by them. That is a lot of people to tell that they need to find new coverage. Just in Georgia alone, they had to tell over 40,000 people that they must find new coverage. What happened to them?
The good news is that Friday Health was very supportive and put a lot of resources towards helping clients continue their coverage during the shutdown. In their website they provided guides and information on how to switch to other companies (which is still in their site today).
Also, back in 2023 when this was all going down, Denver Health and Kaiser Permanente both agreed to honor the accumulations for Friday health members if they selected a Denver plan for the remainder of 2023. Talk about a deal!
The last coverage year for Friday insurance was 2023 so as of this year (2024) they are completely out of the Obamacare/ACA marketplace, and no one is covered by them.
Why did Friday Health Plans go out of business?
Like Bright Healthcare which was another marketplace plan provider who suffered a similar fate, Friday simply could not get enough of a revenue to support the expenses. What exactly happened?
Back in 2022, they signed an agreement for $70 million of equity investment with Leadenhall Capital Partners. Leadenhall and their partners also provided another $50 million in debt financing which brough the total up to $120 million.
That may seem like a lot of money but when you are talking about over 300,000+ members and hospital expenses in the thousands of dollars, it is quickly not enough money. If you add the fact that most plans had $0 primary care visits and low deductibles (while good for the client), it is making them take most of the heavy hits with the costs.
To add to this, the Friday Texas plans owed about $400 million. Even in 2024, the drama continues with a Friday health plan lawsuit that had co-founder David Pinkert winning $450,000 after saying he was fired without cause back in 2022.
There were lots and lots of warning signs that this company was going to come down.
How to know when a health insurance company is going to fail?
Some of you may not know but Friday is not the first health insurance company to shut down its marketplace plans. Bright Healthcare was another titan that ended up going out of business (only their individual and family plans) in 2023.
It seems that this is becoming a common occurrence in the health insurance world. What can you do about it? As health insurance brokers, we know how these companies operate and get a closer look at them. Here are 3 tips on spotting early signs that a health insurance company might fail:
1. They were recently founded
One of the key features that both Friday and Bright Healthcare had in common was that they were relatively new companies. Both were founded in 2015. It is not to say that all new companies are going to fail but it is more at risk compared to other carriers which have been around since the 80s. The younger they are, the less experience they have in dealing with claims, expenses, etc.
2. Receiving a lot of funding
One of the major red flags that a health insurance company may be on its last legs is that they continually need funding. Another common trait that both failed insurer’s share is that before their demise, they received heavy funding.
In 2021, (2 years before they would shut down) Bright Healthcare received a massive $750 million capital investment from Cigna. And just like its failed counterpart, Friday got a $120 million funding before its fall. The pattern is easy to spot here.
Although it is not a bad thing, there is really no reason that a company that is stable and secure would need so much funding all the time. They may just be simply delaying the inevitable…
3. Premiums and prices are too good to be true
Lastly, is that the plan itself that is offered by the insurance company is simply too good to be true. We only support this option because it is tied to #1 and #2. So, if they were recently founded and usually get lots of funding, and have very competitive prices, it is not good.
For the short term, yes, it is good that prices are so low and that you have a $0 deductible. But for a new company (like Bright Health and Friday) it is too much to take on! It is about finding a balance, because if the insurance company offers the lowest prices, it means they are taking all the costs.
For example, recently Oscar Health during the 2023 year stopped offering plans in some states for a period of a few months. They also happen to have very competitive prices, usually appearing as the cheapest options.
Now, why would they stop taking in new clients? Surely it brings them in lots of revenue why would they not want clients?
That is because the costs of bringing in new clients (things like claims, hospital bills etc,) per 1 client were simply too much and they were not making enough revenue to cover those costs. So, to handle this situation, they pulled out of the marketplace for a short period to try and stabilize.
If the company is new and they have competitive prices, just keep an eye on them!!!
Friday Health Plans customer reviews
One sign that the company was on shaky ground was what customers were saying. Friday Health was plagued by negative reviews. It received a Yahoo rating of 1.2 stars and an F rating on the BBB. Certainly, did not help the case.
Common complaints included poor customer service, and ongoing billing after membership was canceled. Some even stated that the app and website were inoperable.
They also stated that Friday insurance did not offer the coverage it promised. Many patients complained that coverage was not available for certain treatments as advertised. They went through a lot of trouble to get reimbursed but were unable to get their money back.
Where is Friday Health Plans now?
As of 2024, there is no recent news on the company, with the last being that they were shutting down operations on Colorado (their founding state). Their website is still the same showing their update message saying that they are shutting down business. It is safe to say that Friday will not be returning as a health insurer anytime soon.
However, that does not mean they are done as a company. Although still rocky, Bright Healthcare rebranded to NeueHealth and is still in business (outside of the marketplace). Could Friday Health do the same thing? Only time will tell…
Frequently asked questions about Friday Health
What states was Friday Health insurance in?
Like many other companies, they did not operate in every state in the country. When they were in business, Friday health insurance was only available in Colorado, Georgia, Nevada, New Mexico, North Carolina, Oklahoma, and Texas.
Also, health insurers work in counties inside the state. So, it is possible that it was in your state but not in your county so you still could not have been covered by them. It eventually shut down its operations in all these 7 states when they ran out of business starting with Texas.
Is Friday health plans still available in 2024?
No, in 2024, Friday health does not offer anymore individual and family plans through the marketplace. They shut down in 2023 following a failure to get enough capital to sustain themselves. It is still not known whether they will be back or if they are done for good. The good news is that there are many other affordable health insurance companies to choose from if you want to get covered.
The Rise and Fall of Friday Health Plans…
Friday Health Plans grew at an incredibly fast pace following its 2015 founding. It enrolled hundreds of thousands of customers and hired hundreds of employees yearly with over $1.95 in premiums revenue. Executives reported the company was hiring 15 new employees per week during its heyday.
However, it was simply unable to scale to meet its growth. It was forced to eliminate Texas from its market offerings and shortly after, every other state put the company under supervision to protect residents from “failed insurers”. And the rest is history.
The company confirmed that it had sufficient capital to make it through 2023, but beyond that, operations are touch and go. The next Friday and Bright disaster could be just around the corner. Remember, always do a little bit of research on a company before purchasing a plan!
