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Obamacare: Buying health insurance on exchange will cost your privacy

Teresa Tanoos's picture
New rule for Obamacare means goodbye medical privacy

Here is another eye-opener regarding your privacy and the Affordable Care Act (a.k.a. Obamacare): If you purchase health insurance through an exchange under the new federal health law, your personal information will be available to state and federal agencies, and most likely to the Internal Revenue Service (IRS).

When Obamacare’s individual mandate takes effect in 2014, all Americans who file income tax returns must complete an additional IRS tax form that requires disclosure of a taxpayer’s personal identifying health information in order to determine compliance with the Affordable Care Act’s individual mandate.

It’s all part of a new Obamacare rule that was issued late on Friday, June 14, just as offices were closing for the weekend break. The new rule requires state, federal and local agencies, as well as health insurers, to swap protected personal health information about anybody seeking affordable health insurance on an exchange that will be enforced by the IRS.

Under federal law, such personal health information is highly protected, but the latest ruling from the Department of Health and Human Services (HHS) allows agencies to swap the information for verification purposes so they can make sure applicants for Obamacare are getting the minimum amount of coverage they need from the health exchanges.

Personal health information – or PHI for short – includes a person’s medical history, test results, lab results, health insurance information and other data. And beginning in January of 2014, Americans without coverage through their employers will be required to buy it on an insurance exchange or else pay a penalty.

Insurance exchanges, like other marketplaces, are where individuals can shop for an Obamacare-compliant plan to meets their needs. Depending on their income, individuals who buy health insurance on an exchange may be eligible for subsidies, but buyer beware…

Under the new rule, private information, including individual medical histories will be made available to a variety of government agencies – and, most likely, the IRS.

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The rule states that “the exchange would submit specific identifying information to HHS, and HHS would verify applicant information with information from the federal and state agencies or programs that provide eligibility and enrolment information regarding minimum essential coverage.”

Put simply, if you want to obtain health insurance on an exchange, you have to surrender your personal health information (PHI). The exchange will then forward your PHI to HHS, where it will also be shared with other state and federal agencies – and since the release of your income is required for subsidy eligibility, your PHI will very likely be shared with the IRS, which is also in charge of enforcing the individual mandate.

The Washington Examiner reports that the rule “does not mention any requirement that applicants first OK the release of their PHI.” Without such requirement, those not buying health insurance on an exchange have good reason to be greatly concerned given the “enforcement” role of the IRS.

In the meantime, Americans for Tax Reform is warning every taxpayer that they’ll have to submit a new form with their annual income-tax return to prove they are complying with the individual mandate.

“This new tax information document must, at a minimum, contain: the name and health insurance identification number of the taxpayer; the name and tax identification number of the health insurance company; the number of months the taxpayer was covered by this medical insurance plan; and whether or not the plan was purchased in one of Obamacare’s ‘exchanges,’” states the not-for-profit organization.

Accordingly, obtaining any person’s medical history, not to mention using it against them, would seem possible and simple enough for the IRS to accomplish. The same holds true for computer hackers wanting to obtain someone’s PHI, especially since hospital and physician networks are now required to manage all medical records online, using a computerized system that anyone on the same network could access.

“Hackers stole millions of medical records from the Veterans Administration, and patients were at risk for identity theft,” according to Elizabeth Lee Vliet, M.D. of the Association of American Physicians and Surgeons.

Whatever the case, it seems that Obamacare will come with a hefty price tag if it means losing your private information “in exchange” for “free” healthcare, especially for those who really need it.

SOURCES: 1. Department of Human Health and Services (HSS), Patient Protection and Affordable Care Act; Program Integrity: Exchange, SHOP, Premium Stabilization Programs, and Market Standards: A Proposed Rule (published in the Federal Register on June 19, 2013). 2. Association of American Physicians & Surgeons (AAPS), Your Medical Privacy–Another Obamacare Casualty by Elizabeth Lee Vliet, M.D.(Oct. 24, 2011).