In January, World Insurance Associates announced the hiring of Jay Kirschbaum as benefits compliance, director and senior vice president.

Risk & Insurance caught up with the Aon, Lockton and WTW veteran to discuss his goals in his new position and get his take on the complex world of employee benefits.

What follows is a transcript of that discussion, edited for length and clarity.

Risk & Insurance: When did you join the group? What is the scope of work you’ll be performing?

Jay Kirschbaum: I’m in my third week with World, so I’m brand new. And my role is to help with the employee benefits department, building that division out, and specifically employee benefits compliance.

I was the head of the benefits compliance group at Willis for 16 years. I’ve been doing the same work more or less for most of my career.

Some former colleagues from Willis contacted me and mentioned that World was really looking to build out the employee benefits practice.

These days, benefits compliance is a huge part of what employers are looking for from their brokers and consultants. They asked me to come on and work with them and build out the compliance part of the benefits practice.

R&I: Given the complexity of benefits, would you say educating the buyer, the insured and the employees is a big piece of this?

JK: It’s huge.

I always go back to when I first started as an employee benefits attorney. Back then, a big part of the work was qualified retirement plans. Health and welfare plans were really off to the side.

Health and welfare issues came up here and there, but they weren’t that complex, and they didn’t come up that often.

But over the course of my career, the compliance obligations for employers have gone through the roof. The past couple of years have accelerated that trend, with all the ongoing requirements associated with COBRA and HIPAA and now mental health parity and transparency and surprise billing.

But even before any of that, HIPAA privacy was a huge educational piece for many employers and their professional staffs.

There didn’t seem to be any rationale from a CFO perspective or from a non-HR or non-benefits executive perspective as to why they couldn’t have health data from the medical plan to prove that a workers’ comp claim was legitimate or  not  work related, or to prove whether somebody really needed leave or to prove why somebody’s not really showing up every day.

The ACA was another big educational process, which is still going on with respect to who’s subject to the ACA.

What are the requirements associated with the ACA? When it says an employer has to do something, does that mean they really have to?

So educating employers was an ongoing task, in a way that wasn’t as critical back when I started doing employee benefits work, as it was on the qualified plan side.

R&I: How much of your work is consulting and how much is coverage placement?

JK: From my perspective, it’s almost all consulting. The actual placement is really the responsibility of the account teams and the people who are working day-to-day with the clients.

I work with clients on an ongoing basis, but I’m not day-to-day placing business, talking about placement of business and finding other coverages that might work.

Now, part of the consulting is in how we want to expand on benefits options. We want to look at different things that we can do and we can talk about and how it plays out.

A current issue is student loan repayments. That is not really a coverage issue, but it’s an additional benefit. And how do we put that in place? What are the issues associated with it? There’s currently a tax benefit for loan repayment that didn’t exist before.

Similarly, if an employer is adding some disability benefit or adding additional life or adding additional drug options, all those things might be a placement issue, and that’s not my role day-to-day. But consulting around the compliance issues associated with that is my area.

R&I: You mentioned student loan repayment, which is really interesting. Can you give us other examples of benefits lay people like us might not be aware of that are now coming into play given this heated recruitment environment?

JK: The general demand is around flexible leave options. And that’s not directly going to be a benefits issue in the pure sense of the term.

One of the flexible work options that has been coming up a lot more is buying or selling additional vacation time or PTO. Many employers would like to offer that and do not realize there are tax issues with doing so.

There are cafeteria plan rules associated with that within the IRC section 125 rules. So if we’re going to add an option to buy or sell vacation, and the employee is going to be permitted to make elections around those options, the employer and employee will be tied into the cafeteria plan rules associated with those choices.

There’s a compliance aspect to making those elections. It’s not just as easy as saying, okay, I’m going to take the additional two weeks of vacation and give up pay for that. Or, on the other hand, I’m going to sell some of my vacation, I don’t really need six weeks of vacation or paid PTO. And I want to get some of that in the form of compensation.

All that is tied back to the section 125 rules, under the cafeteria plan. Since this is an election around compensation, there is a tax compliance aspect associated with it. So the tax rules will govern that flexibility. I’m seeing a lot more questions with respect to how that plays out.

R&I: You mentioned ERISA and HIPAA earlier. As you consider what kinds of conversations you’re going to be having with employers, what are some areas they need to be paying attention to?

JK: The riskiest issues right now are around mental health parity. I’d say that’s number one.

Then the transparency and surprise billing rules that were just passed and are being implemented, both the regulatory and the statutory requirements associated with those requirements.

All of those obligations are directed to the employer based on the legislative and regulatory side, yet the employer doesn’t control any of those plan functions.

The carriers, or if self-funded, the TPAs, and other vendors are really the ones in control of all those issues.

However, the employer’s position as a plan fiduciary is that it is the employer’s obligation to meet those requirements.

Previously, we’ve never really seen that before as an issue on the welfare side. Yes, it’s always been there under ERISA, but because there was no fund or money associated with welfare plans like there is for qualified retirement plans, the fiduciary obligations were not taken as seriously by most employers and their advisors.

Now, the employers are really going to have to look at that and make sure their vendors are on top of the requirements associated with mental health parity, in particular, transparency and surprise billing.

These new obligations will likely force employers to take their fiduciary status more seriously (particularly in conjunction with the broker/consultant disclosure rules that are also new as part of the CAA).

I keep focusing on mental health parity, because the agencies were expressly directed by the Congress in the CAA to investigate employer plan compliance with those requirements.

We want to know what the mental health parity requirements look like in real life, from the perspective of the plans, because the carriers are administering these plans and the employers are reliant on the carriers to administer them.

We want to know what’s really going on with mental health parity. And the Department of Labor (HHS and Treasury) need to do some research by investigating employer plans (and carriers). They have to figure out what the baseline is. They have to see what’s going on currently to know what’s really happening and assess penalties if there are violations associated with those activities.

R&I: Are there areas in the employee benefits space where a new regulation or more oversight would be helpful for not only the employer but also the employee?

JK: After spending a lot of my career in this area, I am somewhat of a cynic, respective to regulatory oversight, but I would have to say that one of the areas I think was due for a change and can benefit from some additional regulatory impetus are the transparency rules.

One of the things that has happened during my career is that we’ve taught consumers to be bad consumers of medical care.

We’ve implemented plan designs that have distanced the user from the provider and from the financial aspect of medical care.

When I started, indemnity plans were still pretty common. You had a relatively high deductible and your co-insurance was often 20%.

Even if you had insurance, there was still a significant financial stake in place, and you had to feel pretty good about what you were doing with respect to your medical spend even if you had group medical coverage. However, with the advent of HMOs and preferred provider networks and all the other kind of managed care options where the carrier and the provider were charged with the financial oversight, that changed.

Your ability as a patient to see and understand what the actual cost is going to be, or even care about the actual cost, was severely limited.

You were really removed from that financial concern.

As a reaction, we saw the introduction of the high deductible plan, coupled with either an HSA or less commonly, an HRA. They have gotten to be more and more common, and many employers have them as full replacement options versus the “traditional” HMO or PPO. That means we, the employees and patients, are going to have a bigger financial stake in our care.

But despite my assumption that employees who had a $4,000, or $5,000 or $6,000 deductible would take more direct participation in finding the better costs associated with treatment plans, that hasn’t really happened as much as I would’ve expected it to happen.

Hopefully, and certainly the policymakers are hoping this, the transparency rules will give people the ability to say, “Hey, this is really going to be costly, or less costly, or I can get the same treatment for less cost, and I can become a better consumer.”

R&I: We’ve seen an unprecedented shift in how we work due to COVID. A lot of working from home, a lot of changing attitudes about work. Do you see other areas where this big shift in how we work is going to impact benefits?

JK: One of the things that we see are these so-called lifestyle accounts, where I’ve got a cafeteria menu from my employer of different things that I can elect. Maybe I’m working from home, maybe I’ve got different requirements or different things I want to do with my benefits dollars.

Maybe I can take time out in the middle of the day to go to the gym. So maybe I’m going to want to get that gym membership as part of my lifestyle account. I’m going to want to get a reimbursement for that.

I never worked in a place where this was true, but you read about the tech companies where there’s food there all day. But, if the employees are now working remotely, that benefit is not as attractive, so the lifestyle account will permit those employees to choose other kinds of benefits that they might want.

Also, transportation benefits are maybe not as important as they once were if you’re working from home. Maybe you don’t need to worry as much about commuter costs so no longer value those benefits. You may want to redirect some of those funds.

However, the biggest benefit has been group medical for everybody. I mean, that’s really the key, from a benefits perspective, with respect to employer spend, employee expectation and what really has a financial impact on employees. And that won’t change working from home versus commuting into an office or into a workplace.

R&I: Is there anything about your new position and your the goals that you would like to share?

JK: From World’s perspective, it’s demonstrating to clients that we have the capabilities to assist them with their benefits issues and concerns. We are available to help clients in an area where they weren’t able to get that assistance previously.

Early in my career, when I left private practice and left in-house practice and joined a broker, we were always so careful to say, “We’re not your lawyers, this is not legal advice. This is just general information, you need to get your lawyers on board.”

I still say that from time to time, but there’s a lot of information and a lot that people who are not practicing lawyers (although I am a member of the bar) that can provide to employers and help them along.

I think that that capability is going to be a much bigger part of what World can provide on a going-forward basis. And I’m pretty excited about being able to do that and being able to get out and help employers with those issues. &