Self-funding is a decision made once and negotiated every year after.
Level-funded, self-funded and captive arrangements each move risk in a different direction, and each one transfers obligations along with it. The decision is worth making on your own numbers. What happens in the four renewals after it is where the money is actually won or lost, and that part is rarely discussed at the point of sale. Before that step, most fully insured groups start with a health and cost strategy built on their own claims.
Three ways to hold risk, priced side by side.
We run all three against your actual claims history rather than an industry ratio, and we say plainly when the answer is to stay fully insured.
Level Funded
Expected claims funded in even monthly installments with stop-loss above them. Surplus can be returned in a good year; a bad year is capped. It is self funding up to the attachment point, which is the part that surprises people.
The consequences follow the substance: the PCORI fee is owed by you, and Section 105(h) nondiscrimination testing applies to the plan.
Self Funded
You pay actual claims from general assets and buy protection above a chosen layer. Cash flow becomes something to manage rather than something the premium smooths for you, and the plan’s fixed costs become visible and negotiable for the first time.
Group Captive
For groups where it fits, a captive pools risk with other employers and can return underwriting profit. It also carries collateral requirements, multi-year commitments and exit terms that deserve reading before the modeling is admired. We place group health captives, and we read the participation agreement with you before comparing one to level funding or stand-alone stop-loss: how collateral is returned, how long you are committed and what leaving costs.
The rate is not the contract. The basis is the contract.
Stop-loss is where a self-funded plan either holds or quietly hands the risk back. Four terms decide which.
Self-funded plans can also buy particular care at a set price through direct contracting.
Contract Basis
Whether claims are covered by when they were incurred or when they were paid — and what happens in the first and last year of a contract — determines whether a gap exists at all. A cheaper rate on a narrower basis is not a saving.
Lasering and Exclusions
A known high-cost claimant can be carved out or given a separate higher attachment point. Sometimes that is a reasonable trade. It should always be a decision you made knowingly. Lasers are typically applied at placement or renewal, and a contract can let one follow the claimant into later years. Ask for an unlasered quote alongside, so you can see what the trade actually costs.
Aggregating Specific Deductibles
An extra layer between the specific and aggregate deductibles can lower premium meaningfully for groups with predictable frequency. It also adds a corridor you fund yourself. It fits a group that routinely sees claims just above the specific deductible, since the corridor absorbs those before the carrier does. The question to ask is how large the corridor is compared with the premium it saves.
Specific and aggregate are not the same deductible, and trend does not move them the same way.
A stop-loss contract holds two attachment points, not one. Only one of them behaves the way people expect when medical trend runs high.
The Specific Deductible
The per-employee attachment point, often $100,000 to $250,000 for a mid-size group. Once one employee’s claims cross it, the carrier picks up what is left — subject to whatever lasers or exclusions the contract already carries. Choosing the level is a trade between premium and the size of the claims you fund yourself, and the right answer depends on your cash reserves as much as your claims history. We model several levels side by side.
The Aggregate Corridor
The plan-wide attachment point, usually set near 125% of expected total claims. It protects against a bad year across everyone, not one large claimant — and in most years it never pays, because the specific side already did the work.
Leveraged Trend
The specific deductible is fixed; the claims above it are not. A $150,000 claim against a $100,000 deductible leaves the carrier holding $50,000 — grow that claim 10% and carrier liability grows to $65,000, a 30% jump from a 10% claim.
Illustrative figures, not a quote. Nationally, 2026 stop-loss premiums rose 13.6% to 15.9% depending on deductible level — roughly five points faster than 2025 — per the 2026 Aegis Risk Medical Stop-Loss Premium Survey with ISCEBS.
The transition is the easy part.
Annual Stop-Loss Negotiation
Attachment points, lasering language and terms that shift risk back to you, reviewed every year rather than renewed by default. We start months ahead with claims and large-claimant data in hand, and put the incumbent up against other stop-loss carriers so the renewal is a choice rather than a default. Rate, contract basis and any new lasers are weighed together.
Claims and Outlier Reporting
Claims, pharmacy and stop-loss data in one report with the high-cost outliers flagged early — the difference between planning around a large claimant and absorbing one. We review it with you on a set schedule, so a large claimant is on the table while there is still time to change site of care, check the stop-loss notice or plan for the renewal.
The Obligations That Came with It
Filings, testing and documents that a fully insured employer never had to think about, carried on a calendar instead of remembered in July. That includes the PCORI fee, which the carrier used to pay, nondiscrimination testing, a plan document and SPD that a carrier certificate does not replace, and a Form 5500 at 100 or more participants, or regardless of size if plan assets are held in a trust. We can help you with the filing and keep each item on your calendar.
Filing the Reimbursement
A claim that breaches the specific is only paid back if it is reported the way the contract says and inside the deadline the contract sets — a notice once a claimant crosses the warning threshold, then proof of loss after the claim is paid. Those deadlines sit in your stop-loss contract rather than in law, which is exactly why they get missed, and a late filing on a large claim is money you funded yourself.
What employers ask about self-funding.
Are we big enough to self-fund?
Size matters less than stability. A group with predictable claims and adequate reserves can self-fund earlier than most expect; a volatile group of the same size may not want the year-to-year swing regardless. Level funding is often the first step for a smaller group, since stop-loss caps the bad year while the employer learns how its claims behave. We model it against your fully insured renewal before anyone commits.
What does stop-loss actually cover?
Two things, and the contract basis decides how much. The specific layer covers an individual above a threshold, the aggregate covers the plan as a whole — and whether the contract pays on incurred or paid dates decides what happens in a transition year. Our plain-English explainer, What Is Stop-Loss Insurance?, walks through both layers and the contract terms that decide what gets paid.
Is the decision reversible?
Yes, but not painlessly. Returning to fully insured means new underwriting and a carrier that now knows your experience, so self-funding should be decided with a view of more than one year. Plan the exit before the entry: know how claims incurred near the end of the arrangement will be paid, and keep your claims data in a form another carrier can underwrite.
What is leveraged trend in stop-loss insurance?
It is the effect of a fixed specific deductible sitting under claims that keep growing. Because the deductible does not move, a claim’s growth above it flows entirely to the carrier’s side of the contract — so a stop-loss renewal typically rises faster than underlying medical trend, and by a wide margin in a heavy claims year.
What is the difference between specific and aggregate stop-loss?
Specific stop-loss protects against one large claimant, with the carrier taking over above a per-employee attachment point. Aggregate stop-loss protects the plan as a whole, paying only if total claims across everyone exceed a plan-wide threshold, usually set near 125% of expected claims. Most stop-loss dollars move through the specific side.
Alternative Funding and Stop-Loss in Bloomfield Hills, Without the Guesswork
Many employers pay more for health coverage every year and have no say in how the price is set. When the renewal lands, they wonder if there is another way. For many mid-size companies, alternative funding and stop-loss in Bloomfield Hills is worth a real look.
We are an independent employee benefits consulting firm, in business since 2007. No carrier owns us. We help you compare funding options side by side and choose the one that fits your cash flow and your comfort with risk.
Alternative Funding & Stop-Loss
“Alternative funding” means any way of paying for health benefits other than a standard fully insured premium. The main options are self-funded plans, level-funded plans and group captives. In each one, the employer takes on some of the claims risk. Stop-loss insurance limits how much that risk can cost.
There are two main kinds of stop-loss. Specific stop-loss protects you from one very large claim. Aggregate stop-loss protects you if total claims for the year run far above what was expected. The dollar amount where stop-loss starts to pay is called the “attachment point.” Setting it well is one of the biggest choices in the whole plan.
We compare stop-loss carriers and contract terms, look for gaps between the stop-loss policy and your plan document, and hold each vendor to its contract. CFH is not a TPA. We find, set up and oversee the administrator who processes claims.
What is a group captive, and is it right for us?
A group captive lets several employers share part of their stop-loss risk together. Each employer still has its own plan, but they pool some risk and may share in the results of a good year. It can give a mid-size company some of the control of self-funding with more stability.
A captive is not right for every group. You need a steady workforce and the patience to stay in for more than one year. We place group captives and can compare them with level-funded and stop-loss options. Our guide on medical stop-loss, captives and level funding lays out the differences.
When should an employer look at alternative funding?
A good time is when your group is past small-group size. In Michigan, groups above 50 employees start to have their own claims count in their price. That is often the point where alternative funding begins to make sense. Start early. Most January 1 renewals arrive in October or November, and stop-loss quotes take time.
Common questions
Do we have to leave our carrier’s network?
Not always. Many self-funded and captive plans use a large carrier network. We check doctor access before you decide. A self-funded plan can rent a carrier’s network through an administrative services arrangement, which is how employees often keep the doctors they already see. Where a captive or level-funded option uses a different network, we run your employees’ current providers against it.
Who keeps us compliant?
Self-funded plans carry federal ERISA duties. We help keep you ERISA compliant, and clients can reach CPAs and ERISA attorneys through the firm. Those duties include a written plan document and SPD, required notices, nondiscrimination testing and the HIPAA obligations that come with seeing claims data. Your administrator processes claims; the sponsor still owns the compliance.
Do you only serve Oakland County?
No. We help with alternative funding and stop-loss in Bloomfield Hills, Auburn Hills, Southfield, Detroit and across the whole state of Michigan. The work runs on your claims data and your contracts, so it does not depend on where you are located. We also work with employers from our offices in Colorado Springs and Houston.
Talk to us about alternative funding and stop-loss in Bloomfield Hills
Send us your renewal or book a 30-minute call, and we will walk through your options. Our office is at 41000 Woodward Avenue, Suite 350 East, Bloomfield Hills, MI 48304. Call 248.370.8853.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
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