Questions on how Demonflame works

So I have built my gear to lower my max health and maximize health regen. I am finally at 146 Life and 150.4 Life regeneration per second. Now at a stacking 0.5% life loss per second, I thought I should be able to reach 206 stacks before I start losing life. However, I can get to 152 stacks before I start taking damage. So at 76% of life loss I'm losing health when my regen rate is at 103% of my max life. Where am I misunderstanding this this ability?

Demonflame appears to be chaos damage. Ensure that while you are shape-shifted, your chaos resistance is 75% (or whatever your max is).

--Hagazussa