A solid Florida estate plan addresses more than just finances. While organizing assets efficiently and providing for the smooth transfer of wealth is vital, you also need to make important decisions about non-financial matters. One area of non-financial matters typically involves decision making that is “medical in nature” AND medical matters in this country are regulated heavily by HIPAA. Thus, today’s topic is a critical one that asks whether your Florida estate plan is HIPAA compliant and we will address this question and the essentials to look it in detail.
Non-financial medical questions typically consider questions such as: What kind of memorial services do you want? How should your final remains be disposed? And, of course, what kind of end-of-life medical treatment do you want to receive? That last question is typically addressed through documents known as “advance directives” also known as “healthcare directives”, “medical directives” or any combination of these terms such as “advance healthcare directives”.
What are Advance Directives in Florida
In Florida, advance directives usually come in the form of a Florida living will and designation of healthcare surrogate, both of which are created as part of a comprehensive estate plan. A living will identifies the forms of medical treatment you want to receive (or do not want to receive) in the event you become incapable of communicating your preferences. And a designation of healthcare surrogate (sometimes called a “medical power of attorney”) authorizes someone else to make healthcare decisions on your behalf if you can no longer decide for yourself.
Advance directives are intended to make things easier on your family members in what is almost certainly a stressful time and to ensure that your healthcare preferences are honored. To successfully accomplish those goals, the documents need to be clearly written and they need to comply with statutory requirements. And, especially with a medical power of attorney, you need to make sure your designated surrogate has access to all of the information he or she needs to make informed decisions. That means accounting for HIPAA, a federal law governing disclosure of healthcare information.
What is HIPAA
HIPAA (Health Insurance Portability and Accountability Act) was enacted in 1996 to promote medical privacy and allow for portability of health insurance. HIPAA advances privacy interests by restricting access to personally identifiable healthcare information relating to a patient’s physical or mental health condition, medical treatment, or payment for medical treatment. Under HIPAA regulations, healthcare providers can only release protected information to third parties to the minimum extent necessary for treatment and payment processing. Otherwise, disclosure is limited to the patient him or herself, or to someone the patient has expressly authorized to receive the information.
A HIPAA authorization (or release) must meet all regulatory requirements to be effective. The document must be in writing, signed and dated by the patient, and state an expiration date. Moreover, it must specifically identify the protected information authorized for release and the person to whom disclosure is permitted. HIPAA has serious penalties, so healthcare providers are reluctant to disclose any information based on a release that does not clearly satisfy the regulatory requirements. And, for the most part, providers will refuse to release any records or information to any third party (including the patient’s spouse) absent a compliant release or court order.
While medical privacy is generally a good thing, HIPAA raises some potential complications in estate planning. Sometimes, an estate plan in Florida relies on a third party—such as a trustee or a healthcare surrogate—having access to medical records or information about a patient’s condition. So, a HIPAA-compliant release is quite often integral to the proper functioning of an estate plan in Florida.
How Can HIPAA Affect Estate Planning in Florida
Estate plans frequently include provisions for healthcare and financial decisions in the event of incapacity. That is, if you are no longer capable of making decisions for yourself, your estate plan has documents automatically appointing an individual chosen by you to act on your behalf. However, if HIPAA prevents that person from obtaining information about your health status, including the simple fact that you have become incapacitated, the incapacity provisions in your estate plan will be at least temporarily thwarted.
This situation most commonly arises with healthcare surrogate designations and living trusts in Florida and elsewhere. In the former case, the surrogate is empowered to make healthcare decisions if you become incapacitated. But, at the same time, if you’re incapacitated, you won’t be able to execute a HIPAA release. As a result, your doctor can’t even inform the would-be surrogate that you’re no longer competent, and, even if there is no doubt about capacity, the surrogate won’t be able to access the medical records necessary to make informed decisions.
Along the same lines, a Florida estate plan might include a Florida durable power of attorney (“POA”) or similar document empowering an agent to make certain identified financial decisions and transactions for the principal (i.e., the person executing the POA). This could include simple but important tasks like paying bills. Absent a HIPAA release, the agent won’t be able to review healthcare billing and insurance information necessary to ensure medical bills are correctly processed.
Similar problems can arise with living trusts. A popular estate-planning approach (in Florida) is to transfer assets into a Florida living trust that names the grantor as trustee and beneficiary. Then, upon the grantor-trustee’s incapacity or death, a successor trustee named in the trust instrument takes over administration and distribution of assets. But if the grantor becomes incapacitated and the healthcare provider doesn’t receive a HIPAA release, the provider won’t be able to inform the successor trustee of the incapacity. Before taking over, the successor trustee needs to establish the initial trustee’s incapacity, but that requires access to medical records. As a result, the successor lacks authority to administer the Florida trust, and trust assets are effectively in limbo.
In these scenarios, the successor trustee, agent, or a relative of the grantor may need to petition a court for a formal ruling on incapacity or for a court order permitting healthcare providers to release medical information to the family or designated agent. The resulting delay can be a big problem if the situation calls for swift decisions, and the need for judicial intervention adds expense and additional legwork in what is already a stressful, difficult state of affairs.
Addressing HIPAA within an Estate Plan
The solution to these potential HIPAA-related pitfalls is to include a HIPAA release within your estate plan—whether through an authorization built into any relevant instruments or through a separate, stand-alone document.
If drafted correctly, a healthcare surrogate designation in Florida can qualify the named agent as a “Florida personal representative” under the HIPAA regulations. A “personal representative” essentially stands in the shoes of the patient, able to access any records the patient could receive and approve disclosures to other parties. If this approach is used, it’s imperative that the designation comply with both Florida’s Health Care Advance Directives statute (Fla. Stat. §765.202) and the relevant HIPAA regs.
For financial transactions, Florida law assumes that a POA is revoked upon the principal’s incapacity unless the document expressly states otherwise. And Florida law also does not recognize “springing POAs,” which purport to become effective upon incapacity. Thus, if you want an agent to handle your financial affairs in the event of your incapacity, you’ll need a durable POA set up to survive incapacity and, if the delegated powers include issues related to healthcare (including billing), a HIPAA-compliant release.
A HIPAA release accompanying a durable POA can limit disclosure to medical records related to billing and insurance, or it can be written more broadly, depending upon the agent’s duties. Notably, Florida law requires agents to act consistently with a principal’s estate plan to the extent it is known to the agent.
As with surrogate designations and powers of attorney, a Florida living trust can be drafted to include a HIPAA authorization, or it can rely on a separate document. Either way, the authorization needs to enable the successor trustee (or anyone else charged with determining incapacity in the trust’s succession clause) to access records sufficient to demonstrate incapacity.
Under Florida law, a HIPAA authorization cannot be effective for more than 24 months. So, practically speaking, it is often preferable to create one HIPAA-compliant release covering all disclosures necessary to accomplish an estate plan’s objectives. If your estate plan includes multiple instruments relying on HIPAA authorizations, periodically updating a single HIPAA release is simpler than separately updating all the other documents.
HIPAA is one of many laws and regulations that can potentially affect a Florida estate plan. An experienced Florida estate planning attorney familiar with relevant state and federal rules can assist in developing an estate plan that accomplishes your objectives and satisfies all the relevant legal requirements.
Steve Gibbs, Esq.