The government was concerned that with one click of a computer mouse, your deepest medical secrets could be spread all around the world to people that could use that information for their own personal gain.
As a direct response to this very legitimate concern, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) was passed. However, the government made the law very difficult to comply with and it was filled with severe penalties. This has made life difficult for doctors, dentists, pharmacists and lawyers ever since.
It wasn’t until 2004 that it became very clear that it severely impacted your estate plan.
There is one major issue raised by HIPAA that can throw your entire estate plan into disarray and bring your caring family members to the brink of disaster. Your estate plan gives detailed instructions that your loved ones take over control of your estate if you become legally incapacitated.
The determination of whether or not you are incapacitated is a medical opinion usually made by one or two doctors. If you are incapacitated the doctors are instructed by your estate plan to give a written letter stating this incapacity to your loved one so he or she can take that letter to the lawyer. The lawyer in turn drafts paper work that your loved one can take to the bank, brokerage house, escrow agent, etc.
The main problem is that HIPAA requires that you give special written authority, BEFORE you are incapacitated, to a third party, such as an adult child, so he or she can access your medical information. No longer can you rely on the doctor freely talking to your family and taking care of the incapacity issue in a matter of moments.
At the time of incapacity, without the proper HIPAA planning, your estate plan will not be able to be implemented. Basically, it’s as if the government came around and put a lock on everyone’s estate plan. If you don’t have the key, you’re in trouble.
And no doctor in this scenario can help you without the proper paperwork. Under HIPAA, if a doctor violates confidentiality (just by telling your son or daughter private medical information) he could face up to five years in jail and up to a $250,000 fine. To make matters worse, if you are in a state like California, where they have the California Confidential Medical Information Act (CMIA), there is an additional $250,000 fine. The CMIA also instructs the exact way that the HIPAA law must be complied with in the state of California.
So, what do you do?
Luckily, the government provided a way to make your estate plan work just like you wanted it to without having to go to court. The key to the governmental lock is called a “HIPAA Waiver.” The HIPAA Waiver states that the specific people you name can communicate with medical personnel about your condition.
Without signing this form, court action might have to be taken to get a hold of your loved one’s medical information. Valuable time and money are taken. People have been hurt without signing this form. And remember, it must be done before someone becomes incapacitated.
As you can see, it’s very important that you have a HIPAA waiver drafted according to your wishes and that you actually sign the document.
