A new federal law on medical privacy is having a big effect on estate planning, and many people should consider reviewing their documents as a result. The law is the Health Insurance Portability and Accountability Act, or HIPAA, which went into effect last year. Many people have become familiar with HIPAA because their doctors are making them sign privacy statements, which are required by the law. The problem is this: A great many estate planning documents say that one person can make decisions for another person if that person becomes “incapacitated” — meaning a doctor determines that they are disabled and unable to handle their affairs. But under HIPAA, doctors have to respect patients’ privacy and can’t tell just anyone about a patient’s condition. In fact, doctors who improperly reveal someone’s medical details could be fined, or even go to jail. So it’s very possible that even if a person does become incapacitated, a doctor will be legally barred from saying so — and therefore no one else will be allowed to make decisions for them. This can happen in many situations. For instance:
• Many people have signed health care proxies, which allow a friend or relative to make medical decisions for them if they become incapacitated.
• Many people have signed “powers of attorney” that allow a friend or relative to make financial and legal decisions for them if they become incapacitated.
• Many trusts provide that a trustee can be removed if he or she becomes incapacitated.
• In many partnerships (including family limited partnerships), a managing partner can be removed if he or she becomes incapacitated.
All of these provisions could become useless if a person becomes incapacitated but a doctor is not allowed to say so. In general, HIPAA allows a doctor to share a patient’s medical information only with the patient and with someone whom the patient has specifically authorized to receive it. So with health care proxies and durable powers of attorney, it’s often a good idea to revise the document to say clearly that a person’s friend or relative is authorized under HIPAA to obtain medical information about whether the person is incapacitated.
In many cases, the way the document is already written is technically okay, and should allow a friend or relative to obtain the information. However, many doctors are worried about HIPAA and very cautious about it. If the document is not absolutely clear, a doctor might hesitate to disclose the information, or a hospital might want to consult an attorney before revealing the facts. This could cause a delay, which could make it impossible for a friend or relative to take actions quickly to protect a person’s interests. Therefore, it’s often good to revise the documents and refer specifically to HIPAA.
If you would like to review any of your documents in light of these medical privacy rules, we would be happy to help you.
About Evan H Farr, CELA, CAP
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