Who doesn’t support privacy? HIPAA is a law designed to protect you health privacy. But if you’re not careful, it can stand in the way of your estate plan’s smooth execution. Here’s what you must know about HIPAA for estate planning.
The government enacted the Health Insurance Portability and Accountability Act (HIPAA) in the early 2000s. One of HIPAA’s goals is to protect your personal health information (PHI) from unauthorized disclosure.
While privacy is a laudable goal, and one I support, actions have consequences. Tinkering in one area of a complex system often impacts another area.
Think of your body. Taking a medication to treat a condition often as not causes side effects you must deal with.The framework of laws governing our lives is such a complex system. When Congress enacts a new statute, we see its ramifications in other areas. HIPAA is no exception.
What is HIPAA?
HIPAA is a law passed by Congress to protect your PHI from unauthorized use and disclosure. It applies to covered entities and their business associates.
HIPAA defines a covered entity as one of the following:
- A healthcare provider that transmits any information electronically connected with a transaction for which Health and Human Services (HHS) has adopted a standard,
- A health plan, or
- A health care clearinghouse.
A business associate is a person or entity that performs functions that involve the use of PHI on behalf of a covered entity.
In other words, HIPAA prevents entities like doctors and insurance companies from disclosing your PHI. This restriction extends to other entities that provide a service to a covered entity that involves the disclosure of PHI. For example, attorneys, medical transcriptionists, or a third-party claims administrators who need access to PHI.
From a privacy aspect, HIPAA is better than nothing. But what happens when privacy regulations are an obstacle in your life?
HIPAA’s Impact on Your Estate Plan
We notice HIPAA’s impact in estate planning when it comes to incapacity. Estate plans often include incapacitation provisions. These provisions need one or more doctors to diagnose the principal incapacitated to trigger some event. For example, a springing power of attorney often requires such a diagnosis before authorizing the agent to act on behalf of the principal.
But there’s an issue when HIPAA blocks access to the principal’s medical records. In that case, the physician’s may not be able to diagnose the principal’s incapacity. Without an incapacity diagnosis, the agent doesn’t have the authority to manage the principal’s affairs. So, in that case, HIPAA’s privacy protection becomes problematic.
As I explained in Why You Must Plan for Incapacity, having an agent acting on your behalf when you’re incapacitated helps with many medical and financial issues. But, having an agent doesn’t do any good if a privacy rule like HIPAA blocks a power of attorney from taking effect.
How to Plan Your Estate with HIPAA in Mind
The good news is that HIPAA allows the patient to allow certain people to access the patient’s PHI.
Attorneys, healthcare providers, and insurance companies use various terms such as a HIPAA Release or a HIPAA Authorization to describe these documents. The critical point isn’t the name but that you have one of these documents as a part of your estate plan. And it must conform to HIPAA’s rules about authorizations. That way the people who need access to your medical records will have it when needed.
What This Means For You?
A HIPAA authorization is only one of several documents necessary for a thorough and well-thought-out estate plan. It provides a way for doctors and family members to access your PHI if you become incapacitated.
One important thing to remember is that HIPAA has only been around since the early 2000s. So, if you have an old estate plan, you may be missing the HIPAA authorization. Please be sure to check and add this vital document to your plan if you don’t already have it.