The Impact of HIPAA's Privacy Rule on Estate Planning
Q: Do you need to amend your estate planning documents?
A: In 2003, the Health Insurance Portability and Accountability Act (HIPAA) Privacy Standards went into effect. For the first time, the Privacy Standards create national standards to protect individuals’ medical records and other personal health information. Protected Health Information (PHI) under HIPAA includes information which relates to an individual's: (1) past, present or future physical or mental health; (2) health care; and (3) payment for health care.
Q: How does HIPAA impact estate planning documents?
A: The HIPAA problem arises in estate planning documents which provide that the power for someone else to act on your behalf only "springs" into action if you become incapacitated. Incapacity is often required to be determined by one or more licensed physicians. Such determination of incapacity can only be provided if the health care provider is permitted to disclose such information. HIPAA effectively creates a Catch-22 situation in that, the person named as power of attorney upon your incapacity may not have access to your health information and may not be able to prove that you are incapacitated.
Q: What type of estate planning documents are affected by HIPAA?
A: Affected estate planning documents include:
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Executor or guardian provisions of a will. |
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The status of trustees and other advisors named in a trust and the method to transition authority to successors. |
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An agent’s status under a durable power of attorney or health care power of attorney. |
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The status of a general partner, managing partner or managing member in a family limited partnership or limited liability company. |
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The effective date of a springing durable power of attorney or health care power of attorney. |
Q: Do I need to revise my estate planning documents to comply with HIPAA?
A: If any of your estate planning documents provide that the incapacity of an individual affects that individual’s powers or status or the effective date of a document you should consider amending the document to comply with HIPAA. These documents should contain provisions that comply with the HIPAA Privacy Standards so that someone can obtain the medical information of the grantor, trustee, successor trustee, partner or member and transition authority to the successor, if warranted.
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