Is Your Organization Ready to Explore Alternative Benefits Strategies?

Family-coverage healthcare premiums have increased 26% over the past five years, outpacing wage growth and well outpacing inflation.¹ The employers gaining visibility into what’s driving those costs — and the tools to manage them — are increasingly turning to a category of strategies once reserved for large corporations. For many small- and mid-sized employers, the question is no longer whether alternative employee benefits strategies exist — it’s whether their organization is ready to pursue them.

The landscape has evolved considerably. Level-funded health plans, medical stop-loss captives for employers, reference-based pricing and partially self-funded health insurance offerings are increasingly accessible to small- and mid-sized employers. The healthcare cost-control strategies that large corporations have long used to manage their benefits spend are within reach for a much broader segment of the market than most employers realize.

Accessibility is only part of the equation. The right alternative benefits funding strategy depends on a careful evaluation of where your organization is today: workforce demographics, claims history, financial position, risk tolerance and cost management objectives. The employers getting the most value from these strategies have something in common — they’ve matched the right approach to their specific workforce, claims profile and financial position.

What is driving your healthcare costs?

The starting point for any alternative strategy evaluation is claims data. Employers who have access to detailed claims reporting — whether through a current self-funded or level-funded arrangement or through a data-sharing agreement with their carrier — are better positioned to evaluate alternative strategies than those operating without visibility into their cost drivers.

If your organization is currently fully insured and lacks access to claims data, that isn’t a disqualifier – it’s a starting point. The first step is often working with technology tools to capture your plan experience or building the data infrastructure needed to make an informed decision, alongside an advisor who can help you access and interpret that information.

How has your claims experience trended?

Organizations with stable, predictable claims histories are typically the strongest candidates for alternative benefits strategies — particularly medical stop-loss captives for employers and partially self-funded health insurance for small employers. A workforce with favorable health trends and a manageable prevalence of chronic disease is well-positioned to benefit from structures that allow employers to share in underwriting profits or recapture unused claims dollars.

Employers with more complex claims profiles have meaningful options. Minimum essential coverage (MEC+) plans, reference-based pricing and certain level-funded health plans deliver real value even for organizations with higher-risk populations. The key is matching the right strategy to the actual risk profile of your workforce.

What is your organization’s risk tolerance?

Alternative benefits funding strategies reshape the employer’s relationship with financial risk. Employers assume greater responsibility for claims funding in exchange for greater control, transparency and potential financial upside. Stop-loss protection mitigates catastrophic exposure — and understanding your financial position and your capacity to absorb variability in claims spending is part of choosing the right structure.

For organizations exploring alternative funding for the first time, level-funded health plans for small- to mid-size businesses offer the most predictable financial structure — with fixed monthly payments, stop-loss protection and the potential for a year-end refund if claims run favorably. They’re a natural starting point for employers who want to evaluate the model before committing to a more advanced structure.

Is your leadership team aligned?

Successful implementation of an alternative employee benefits strategy requires organizational alignment that extends beyond the HR and benefits function. CFOs and finance leaders need to understand the financial structure and cash flow implications. Operations and people leaders need to support any changes to plan design or provider access that accompany the transition.

Employers who’ve built internal consensus around the goal of greater healthcare cost control move quickly and decisively when the right strategy is identified.

Where to start

Readiness isn’t binary. Most employers exploring alternative benefits funding strategies are somewhere on a continuum — curious about their options, gathering data or actively evaluating a specific approach. The most useful starting point is a clear-eyed look at where your organization stands today: what your claims history looks like, how your leadership team is aligned and what level of financial engagement your organization is prepared to take on.

For organizations facing repeated premium increases with limited visibility into what’s driving them, the case for exploring healthcare cost-control strategies is straightforward. For those still building the data infrastructure or internal alignment needed to make a move, the evaluation process itself has value — it positions your organization to act with confidence when the time is right.

For most organizations, the natural entry point is at least 120 days before your benefits renewal date. If that window is on the horizon, the readiness conversation should start now.

HUB’s Alternative Risk Solutions (Employee Benefits) practice specializes in helping small- and mid-sized employers evaluate the full spectrum of alternative benefits funding options and identify the right starting point for their organization. Contact a HUB advisor to start the readiness conversation. Learn more at hubinternational.com.

¹ KFF, “2025 Employer Health Benefits Survey,” October 22, 2025.