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HIPAA Rules And Planning
Jan L. Warner & Jan Collins

Question: Late last year, my wife and I engaged a lawyer who came highly recommended as a savvy estate planner. We had him prepare our trusts, powers of attorney, wills, and health proxies. But, in retrospect, after reading our documents thoroughly, we think he dropped the ball.

While we wanted to appoint our children and a bank trust department to act only if we became medically incapacitated to act for each other, we now find out that due to medical privacy regulations, if we get sick, there is no one authorized to get the medical information needed to allow our chosen agents to be notified, step in, and make the necessary medical and financial decisions for us. How can this be remedied, given the confusion about getting medical records today?

Answer: Like most individuals, you and your wife want to make sure that you retain control of your health care and financial decision making until you are no longer able to do so because of either physical or mental incapacity. For that reason, since the appointment of your substitute agents and fiduciaries and their authority to act is conditioned on your incapacity, a big problem exists when your documents do not authorize your medical providers to provide information if and when you no longer have the capacity to make your own decisions.

These springing appointments and resulting authority and power, called “springing” because they come into existence only upon the occurrence of a specific event -- your mental or physical incapacity -- are included in many health care powers of attorney, durable powers of attorney, trusts, and even business-related agreements.
To make matters worse, the laws in most states clearly state that health care powers of attorney and proxies do not become effective unless/until the person who signs the document is incapacitated, or as some put it, “incompetent.”

Based on regulations promulgated under HIPAA (Health Insurance Portability & Accountability Act) that became effective in April 2003, your health care providers are only authorized to provide your protected medical information to an individual whom you appoint as your "legal representative" – that is, someone you specifically appoint to receive it.

Therefore, without you appointing a present “legal representative” – and probably more than one if you are married and name your spouse -- if you become incapacitated, your fiduciaries may not be able to find out that you are not capable of making your decisions. Consider : If you and your wife were involved in an accident and the proper documents were not in place, your alternate agents may not be notified because of privacy issues.

What is the solution? First of all, documents must be drafted more carefully to include provisions that ensure that relatives and/or friends and/or corporate fiduciaries have the authority to communicate with and receive information from your health care providers when necessary. Otherwise, a court proceeding will probably be necessary. In other words, language providing these authorities should be included in your documents.

While some legal scholars argue that HIPAA has changed nothing, we disagree because of the practicalities that occur every day of spouses and children not being able to get medical information. We don’t believe that a physician can certify that a patient is incapacitated without a properly executed authorization. In fact, if hospitals and physicians don’t see what they consider to be the “magic language,” the document will be referred to their legal department or lawyers for review, which can take valuable time when the patient may not have it.

Taking the NextStep: At a minimum, we suggest that language be included in estate planning documents is as simple as: “All my fiduciaries and agents named herein are hereby immediately designated as my legal representative for the purposes of HIPAA, whether I am incapacitated or not.” Another solution may be to sign a separate HIPAA release without time limitations.

Either way, this is a problem that should be solved in the document drafting process, so be sure your lawyer is put on notice of this problem in case he/she is unaware. And we can almost assure you that documents generated from the Internet and word processing programs will not contain this important language. For more information and a sample medical release, click on the related article link for our sample form.

Need more advice or help with this topic? Click here to get information about taking the "Next Step".

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