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Health FSAs Are Subject To The HIPAA Privacy Rule

 By Jessica Forbes Olson of Dorsey & Whitney LLP

Prior to the April 14, 2003 deadline for compliance with the Health Insurance Portability and Accountability Act ("HIPAA") Privacy Rule, the U.S. Department of Health and Human Services ("DHHS") was considering whether a Health Flexible Spending Arrangement ("Health FSA"), also known as a Health Care Reimbursement Account, is a “health plan” that would need to comply with the HIPAA Privacy Rule. On April 24, 2003, DHHS announced its conclusion that, because a Health FSA is an ERISA employee welfare benefit plan that pays for medical care, it is a health plan and thus a covered entity under the HIPAA Privacy Rule. Accordingly, employers that sponsor a Health FSA will need to review the Health FSA’s compliance with the HIPAA Privacy Rule.



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