What do self-funding strategies often aim to combine with?

Self-funding strategies are primarily designed to manage costs associated with employee health benefits or other risks by retaining a portion of that risk within the organization. These strategies often include stop-loss policies as a critical component.

Stop-loss policies serve as a safety net for self-funded plans, protecting the organization from excessive losses that could occur if claims are higher than expected. When an organization self-funds its health plan, it assumes the risk of paying out claims. However, to mitigate the financial exposure from particularly high claims, a stop-loss policy will reimburse the organization once claims exceed a certain threshold or per-claim limit. This combination allows organizations to balance the benefits of self-funding—such as reduced premiums and greater control over funds—with a level of security against unexpected spike in claims.

In this context, while reinsurance contracts, captive insurance arrangements, and risk retention groups play important roles in risk management, they do not directly align with the common practices and protections that self-funding strategies typically implement, which primarily focus on the use of stop-loss insurance to limit financial exposure.