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THE EFFECT OF HIPAA
PRIVACY RULES ON YOUR ESTATE PLAN
Introduction:
The
HEALTH INSURANCE PORTABILITY AND
ACCOUNTABILITY ACT OF 1996 (“HIPAA”) although enacted in
August of 1996 only had certain related regulations became effective
last year and these regulations have had far reaching influence on
certain standard estate planning tools in ways perhaps not envisioned by
its drafters. It primarily deals with the portability of insurance but
also gave the Department of Health and Human Services (“HHS”) authority
to enact regulations to prevent unlawful dissemination and disclosure of
personal health care information.
It is in those
regulations that became effectively recently that rules have been
created that require rethinking and redrafting of many Trusts and Estate
Plans, including Durable Powers of Attorney. See chapter six of our web
article on Estate Planning.
Basic Law of HIPAA
Regulations:
The HIPAA privacy
regulations apply to every physician, dentist, nurse, pharmacist and
health care provider in the United States. The regulations prohibit
those health care providers from disclosing “individually identifiable
health information” without the prior consent of the individual.
Said information
includes all data that relates to
-
the individual’s
past, present or future physical or mental health or condition,
-
the provision of
health care to the individual, and
-
the past,
present or future payment for the provision of health care to the
individual.
Entities subject to
the HIPAA regulations may not use or disclose the protected health
information except for purposes of carrying out treatment, payment for
services or health care operations, or as the individual authorizes in
writing.
Further, the HIPAA
regulations stress that health care providers must make reasonable
efforts to limit the disclosure of protected health information to the
minimum information necessary to accomplish the intended purpose of the
use, disclosure or request.
Penalties for
Violation of the Regulations:
Violation of these
regulations can lead to significant fines and even imprisonment thus
health care providers are taking these restrictions quite seriously.
Authorization for
Release of Information:
The HIPAA
regulations do allow individuals to authorize the release of their
medical information to third parties. Under the regulations, an
authorization for the release or disclosure of an individuals’ protected
medical information must:
1.
be a
written document signed and dated by the individual
2.
identify the protected health information to be used or disclosed,
3.
identify the persons to whom the information may be disclosed
4.
contain
an expiration date
5.
identify the individuals’ right to revoke the authorizations and
6.
acknowledge that the information may be redisclosed by the recipient.
Additionally, and of
great import for estate planning purposes, the regulations allow
individuals to designate a “personal representative” to whom the
information may be disclosed or who may request said information be
disclosed to a third person. In short, the personal representative has
the same power and ability as the individual does to request, disclose
or authorize the release of any of the protected health information.
Estate Planning
Ramifications:
The two areas the
new regulations most effect estate planning involve
powers of attorney
and
trusts. A
power of attorney is a written document by which the principal
designates an agent or attorney in fact to make financial or health care
decisions for the principal and are discussed in more detail in our
article on Estate Planning.
POWERS OF ATTORNEY
AND THE HIPAA
There are two types
of powers of attorney at issue: ones that relate to property and ones
that relate to medical decisions. Durable Powers of Attorney
survive the incompetency of the principal and are useful to provide that
someone appointed by the now incompetent principal can make either
health or property decisions for the principal while he or she remains
incompetent.
Health care powers
of attorney generally authorize the agent to contract for health care
services, have access to medical records and consent to their
disclosure. However, medical providers may be unwilling to share medical
information with an agent in the absence of a medical release or
designation of the health care agent as the personal representative
that specifically complies with HIPAA regulations. To ensure that a
health care agent can readily access medical records and can authorize
their disclosure to others, health care powers of attorney should
specifically incorporate the HIPAA release provisions and identify the
agent as the “personal representative” for purposes of HIPAA
regulations. Legal advice should be sought to ensure this compliance.
Some medical durable powers of attorney already meet the requirements of
HIPAA and may not have to be altered.
Property durable
powers of attorney can be effected because when they can become
effective often depends upon a physician determining that the mental
condition of the principal is no longer competent-precisely the
information that the HIPAA prohibits being released. As one client
commented, at the moment it is most crucial to obtain the information,
it is barred from release by the physician under HIPAA. As with trust
instruments described below, the solution is to include the appropriate
HIPAA language either in the instrument itself or in a separate
document.
TRUSTS AND THE HIPAA
As with the durable
power of attorney for assets, successor trustees seeking to know if a
trustee (who may also be the settlor) is still competent may not be able
to obtain access to the medical information critical for them to know if
they must assume the duties of trustees. The successor trustee must be
able to prove incapacity before he or she can act but may not be able to
do so unless the prior trustee has authorized the release of his or her
medical information to the successor trustee under those circumstances.
Again, the solution is an alteration in the Trust itself wording or in a
separate document executed by the settlor (and the trustees) to allow
the successor trustee access to such critical medical information.
Our recommended form
authorization can be found on the
Retainer Page Forms page.
Alternatively, those with existing wills, trusts and/or durable powers
of attorney may want to contact legal counsel to have those documents
amended to conform to the new requirements.
Conclusion:
As with so many
changes in the law, a policy or plan that has beneficial intent results
in requiring additional and often expensive alteration in existing
structures and documents that were unintended. While this particular
alteration is not expensive to implement, the effect on family and
assets for those not taking the trouble could be not only expensive but
deeply harmful to family dynamics. The reader is advised to take steps
to adjust his or her own estate plan to conform to the new requirements
for, quite simply, only the reader has the power to prepare for this
eventuality regarding his or her own estate plan. |
