medZERO Raises $5.7M for BNPL Plan to Cover Out-of-Pocket Healthcare Costs

Employer-sponsored buy now, pay later (BNPL) offering medZERO on Friday (Dec. 10) announced it has closed a $5.7 million seed financing round that it will use to invest in its digital platform and hire new employees in the sales, marketing and operations departments.

Silicon Valley venture capital firm True Ventures led the latest medZERO funding round with additional participation from Village Global and angel investors. Through medZERO, employees’ out-of-pocket medical expenses become installment payments with no interest or fees through payroll deductions.

“The status quo is unsustainable as the entire system is negatively impacted,” medZERO CEO and Co-founder Craig Froude said in the company announcement. “Hospitals and medical professionals are writing off billions annually as uncollectible.

“Medical debt is the number one reason for personal bankruptcy, so people either defer care or risk being sent to a collection agency. Financially stressed employees are less productive and more likely to change jobs. This often comes at great cost to both the employee and their employer. MedZERO was created to address these problems for all parties,” he said.

Half of all Americans have medical debt and half of those owe more than $1,000 in healthcare-related expenses, according to the announcement. About 40% of employees had trouble affording their premiums, deductibles, cost-sharing or an unexpected bill last year, the firm said, citing the Kaiser Family Foundation, and 51% of employees have deferred care because of the cost.

“We’re creating a smarter way for employees to pay for care, which leads to happier, healthier, and more productive teams,” Howard Michalski, medZERO president and co-founder, said in the announcement. “We’re excited by the possibilities.”

Related: Klarna Debuts Browser Extension for Online Stores

Meanwhile, BNPL platform Klarna rolled out a browser extension to allow customers to use the company’s flexible payment options on their desktop computers at all online stores.

The new feature automatically adds coupons and cashback offers on purchases using Klarna’s BNPL option. Klarna’s recent acquisition of Piggy will fuel the browser extension’s implementation and growth.