Covered entity: Overview, definition, and example
What is a covered entity?
A covered entity is an organization or individual that is subject to certain regulations, particularly those related to privacy and data protection. The term is often used in contexts such as healthcare, where covered entities are required to comply with specific laws like the Health Insurance Portability and Accountability Act (HIPAA) in the U.S. Covered entities can include healthcare providers, insurance companies, employers, or any other organizations that handle sensitive data or information. The responsibilities and obligations of a covered entity depend on the specific regulations they are subject to.
Why is a covered entity important?
A covered entity is important because it has legal responsibilities to protect sensitive information, such as personal health information (PHI) or financial data. These entities must comply with strict privacy and security rules to ensure that this information is safeguarded from unauthorized access, misuse, or disclosure. For businesses and individuals, understanding whether they are a covered entity helps clarify their obligations and the steps they need to take to comply with the relevant laws, avoiding potential legal penalties or breaches of trust.
Understanding covered entity through an example
For example, a hospital is a covered entity under HIPAA because it stores and processes patients' medical records. The hospital must implement appropriate security measures, such as encrypting patient data and training staff on privacy protocols, to protect that information from unauthorized access.
Another example might be a health insurance company that is a covered entity under HIPAA as well. The company needs to ensure that any personal health information it handles is kept confidential and secure, whether it's stored electronically or in paper form.
An example of a covered entity clause
Here’s how a covered entity clause might appear in a contract:
“The parties acknowledge that the Company is a covered entity under HIPAA and agrees to comply with all applicable privacy and security requirements related to protected health information.”
Conclusion
A covered entity is an organization or individual bound by specific legal obligations regarding the handling of sensitive information. Whether in healthcare or other industries, understanding what it means to be a covered entity is crucial for complying with privacy regulations and ensuring the protection of confidential data. By including covered entity provisions in contracts, businesses can ensure they meet legal requirements and safeguard the information they manage.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.