medical
Estate Planning: What You Don’t Know Can Hurt You and Your Family
By Jenny Migdal, CFP
for Sound Mind Investing
As a financial planner, one of my responsibilities is to anticipate legislative changes and their effects on clients. Estate planning is an area where change is so frequent — and so confusing — it's an extraordinary challenge to stay up-to-date.
Recently, a client needed to update her family's estate-planning documents. As a minimum, each of my clients has a will or trust, a living will, a durable power of attorney (DPOA) for financial matters, and a DPOA for health-care matters. Each DPOA appoints a "temporary agent" to act in that area in the event of incapacity. For this particular client, I wasn't using my usual attorney, so I was interviewing another firm to determine whether they provided a health-care DPOA in their package. The attorney I was speaking with raised several issues I had never considered related to the Health Insurance Portability and Accountability Act of 1996 (commonly known as HIPAA).
Being of the Researcher temperament, I followed up on what he told me to make sure he had the facts right. He did. What I discovered has significant implications for my family, my clients, and SMI readers.
HIPAA was designed to increase privacy protection for personally identifiable medical information. You probably have had to sign paperwork saying you've received your doctor/dentist/clinic's HIPAA Privacy Notice. Basically, a care provider must have your permission to disclose this information. In an emergency situation, or in the case of a patient's incapacity, the provider may disclose certain information at its discretion if the provider determines it is in the patient's best interest. However, since top penalties for unauthorized disclosure are fines of $250,000 and 10 years in jail, many providers understandably choose to not release information even when it could be helpful to do so.
I like my privacy, so the HIPAA restrictions sounded good initially, but as with many laws, HIPAA can have unintended consequences. Suppose I am incapacitated. I have a health-care DPOA, so my husband would have authority to make decisions on my behalf if a doctor certifies that I'm incapacitated. But under HIPAA, the disclosure of my incapacity could be considered a prohibited release of private medical information. (I know you're thinking "Where's our common sense?" Come on, folks, this is the legal system.)
Let's look at another "incapacity" scenario. If my husband and I both became incapacitated and we were incapable of response, our designated default agent is a close Christian friend. Although we are like sisters, she is not a family member in the legal sense. Under HIPAA, my doctors could choose not to release information to her, creating a situation in which she would not be able to act so as to provide for us quickly and easily in accordance with our Christian beliefs.
Here's another scenario. Suppose I were to be hospitalized for severe mental illness. In an effort to protect me and those around me, many of my civil rights would be taken away. But my rights under HIPAA would apply, forcing the hospital or facility to decide whether I can be my own advocate. Perhaps in my paranoia, delusion, or hallucination, I am convinced that my husband is trying to harm me rather than help me. The hospital is left to solve this conundrum without violating HIPAA requirements, and my husband is left angry and frustrated because he isn't able to make decisions for my best care.
Too dramatic? Here's a more likely case. I'm hospitalized and in desperate need of prayer. My pastor is denied access to me or information about me because of concerns about violating HIPAA. Even a notice in the church bulletin can't be posted without my permission, and I'm unable to give permission because of my condition.
The unintended consequences of HIPAA probably need to be addressed legislatively. But until that happens, what can you do? The best approach is to be more explicit in your estate-planning documents. Unfortunately, HIPAA didn't authorize or create a specific standard form for authorizing the release of information. But if you create paperwork that demonstrates your specific intent, often that will constitute enough authority to address a provider's legal concerns. Specifically, you should state in new or revised estate-planning documents that you intend them to be HIPAA compliant, and that you intend them to include all authorizations that your health care DPOA includes. You should further mention that you are signing the documents voluntarily and without duress. Also be clear about when you intend for the release of information to expire, and note that your medical information can be released to the agent after your death if he/she requests it (to pay bills, send death certificates to financial agencies, etc.).
Here are two more personal applications related to HIPAA and information releases. (1) I am the agent for my single mother. With her authorization, I need to update her estate-planning documents as soon as possible, and I need to have an easily accessible copy in my possession. (2) My children will go off to college in a few years. At age 18, they'll be considered adults. Therefore, I will need to get each one to sign an authorization for the release of medical information to me in the event of incapacitation. These signed authorizations will need to be in my possession.
Of course, my prayer is that none of the scenarios I've raised will ever be an issue in your family or in mine. But it would seem to be wise stewardship to think through these issues and to take action — now.
[Disclaimer: I am not licensed to practice law. Please consult an attorney in your state to assure that you comply with all applicable laws and regulations.]
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