Introduction To The SOC 2 Vs HIPAA - Things You Need To Know

Two key frameworks that address the security and privacy of sensitive data are SOC 2 and HIPAA. SOC 2 is a set of auditing standards developed by the American Institute of Certified Public Accountants (AICPA) to ensure companies have appropriate controls in place to protect customer data. HIPAA, on the other hand, is a federal law that regulates how healthcare organizations handle patient data. In this blog post, we will explore the similarities and differences between SOC 2 and HIPAA to help you determine the importance of each framework.

Contents

1 What Are SOC 2 And HIPAA?
2 Who Needs To Be Compliant With HIPAA And SOC 2?
3 Importance Of SOC 2 And HIPAA Compliance
4 Difference Between SOC 2 Trust Principle And HIPAA Rules
5 Coping With Data Breaches And Violations Under SOC 2 Vs HIPAA
6 Conclusion

What Are SOC 2 And HIPAA?

SOC 2 (System and Organization Controls 2) is a set of auditing standards developed by the American Institute of Certified Public Accountants (AICPA). Its purpose is to ensure that companies have appropriate controls in place to protect customer data. SOC 2 audits evaluate an organization’s controls in five key areas: security, availability, processing integrity, confidentiality, and privacy.

HIPAA (Health Insurance Portability and Accountability Act) is a federal law that regulates how healthcare organizations handle patient data. It is in law since 1996 to protect the privacy and security of individuals’ health information. HIPAA compliance includes standards for administrative, physical, and technical safeguards that organizations must implement to protect electronic protected health information (ePHI).

Who Needs To Be Compliant With HIPAA And SOC 2?

HIPAA compliance is mandatory for any organization that handles electronic protected health information (ePHI) in the United States. This includes covered entities, such as healthcare providers, health plans, and healthcare clearinghouses, as well as their business associates, such as third-party vendors that handle ePHI on their behalf.

SOC 2 compliance, on the other hand, is voluntary and applies to any organization that handles sensitive data. This can include companies in industries such as technology, finance, and retail, among others. SOC 2 compliance can be particularly relevant for organizations that provide services to other businesses, as it can help establish trust and credibility with customers.

While HIPAA compliance is mandatory for covered entities and business associates, SOC 2 compliance is a way to demonstrate a company’s commitment to data protection and security. However, some companies may need to comply with SOC 2. In case when they are contractually bound to do so by their customers or partners.

Importance Of SOC 2 And HIPAA Compliance

SOC 2 and HIPAA compliance are both important for organizations that handle sensitive data. Here are some of the reasons why:

Protecting sensitive data: Both frameworks aim to protect sensitive data, whether it is personal information or health information. Compliance with these frameworks helps ensure that organizations have the necessary controls in place to protect this data from unauthorized access or theft.
Legal and financial consequences: Failure to comply with HIPAA or SOC 2 can have serious legal and financial consequences. For HIPAA, non-compliance can result in fines and damage to an organization’s reputation. SOC 2 non-compliance can also result in loss of business and reputational damage, particularly for companies that handle sensitive data.
Building trust with customers: Compliance with SOC 2 and HIPAA can help build trust with customers, particularly in industries where data security is a top priority. Being able to demonstrate compliance with these frameworks can give customers confidence that their data is in safe hands.
Competitive advantage: In industries where compliance with SOC 2 or HIPAA is not mandatory, obtaining compliance can be a way to differentiate from competitors. Compliance can demonstrate a company’s commitment to data security and protection, which can be a valuable selling point.

In summary, SOC 2 and HIPAA compliance are both important for organizations that handle sensitive data. Compliance can help protect data, avoid legal and financial consequences, build trust with customers, and provide a competitive advantage.

Difference Between SOC 2 Trust Principle And HIPAA Rules

SOC 2 Trust Principles and HIPAA Rules are two frameworks that aim to protect sensitive data, but they differ in their approach and scope. Here are some of the key differences:

Scope

SOC 2 Trust Principles are a set of auditing standards that cover a broad range of areas, including security, availability, processing integrity, confidentiality, and privacy. The Trust Principles provide a comprehensive framework for evaluating an organization’s controls related to data security and privacy. HIPAA Rules, on the other hand, specifically focus on the privacy and security of protected health information (PHI) for covered entities and their business associates.

Approach

SOC 2 Trust Principles are designed to be flexible and adaptable to a variety of industries and situations. They are meant to provide a general framework for evaluating controls but do not prescribe specific requirements. HIPAA Rules, on the other hand, are very prescriptive and include specific requirements for handling PHI. Covered entities and their business associates must implement and maintain specific safeguards to protect PHI, including administrative, physical, and technical safeguards.

Enforcement

SOC 2 Trust Principles are not regulated by a specific government agency but instead are audited by independent third-party auditors. The AICPA oversees the SOC 2 auditing process, and organizations must provide a SOC 2 report to customers and partners to demonstrate their compliance with the Trust Principles. HIPAA Rules, on the other hand, are enforced by the Department of Health and Human Services Office for Civil Rights (OCR). Covered entities and their business associates can face fines and other penalties for non-compliance.

In summary, while SOC 2 Trust Principles and HIPAA Rules both aim to protect sensitive data, they differ in their approach and scope. SOC 2 Trust Principles provide a broad framework for evaluating controls related to data security and privacy, while HIPAA Rules specifically focus on the privacy and security of PHI for covered entities and their business associates. Additionally, SOC 2 compliance is audited by independent third-party auditors, while HIPAA compliance is enforced by the OCR.

Coping With Data Breaches And Violations Under SOC 2 Vs HIPAA

Here are some of the key differences in how these frameworks address data breaches and violations:

Reporting Requirements

Under HIPAA, covered entities and their business associates are required to report any breaches of unsecured PHI to the affected individuals, the OCR, and in some cases, the media. These breaches must be reported within a specified timeframe, and the OCR can investigate and impose fines and other penalties for non-compliance. SOC 2 does not have specific reporting requirements for data breaches, but if a breach occurs, it may impact an organization’s ability to maintain compliance with the Trust Principles.

Penalties

HIPAA violations can result in significant financial penalties, as well as damage to an organization’s reputation. Fines can range from $100 to $50,000 per violation, with an annual maximum of $1.5 million. In addition, covered entities and business associates can face criminal penalties for knowingly violating HIPAA. SOC 2 violations do not have specific financial penalties, but non-compliance can result in loss of business and reputational damage.

Specific Requirements

HIPAA includes specific requirements for handling and protecting PHI, such as implementing administrative, physical, and technical safeguards. Failure to comply with these requirements can result in violations and penalties. SOC 2, on the other hand, does not include specific requirements but instead evaluates an organization’s controls related to data security and privacy. If an organization fails to maintain adequate controls, it may count as non-compliant with the Trust Principles.

In summary, both SOC 2 and HIPAA have significant consequences for data breaches and violations. HIPAA has specific reporting requirements and financial penalties for non-compliance, while SOC 2 focuses on evaluating an organization’s controls related to data security and privacy. Organizations should carefully evaluate their specific needs and requirements to determine which framework is appropriate for their situation and work to maintain compliance to protect sensitive data and avoid penalties.

Conclusion

In conclusion, SOC 2 Trust Principles and HIPAA Rules are both important frameworks for protecting sensitive data, but they differ in their approach and scope. SOC 2 Trust Principles provide a general framework for evaluating controls related to data security and privacy, while HIPAA Rules specifically focus on protecting the privacy and security of protected health information for covered entities and their business associates. Both frameworks are important for building trust with customers, avoiding legal and financial consequences, and demonstrating a commitment to data security and protection. If you are looking to implement any of the Infosec compliance frameworks such as SOC 2 compliance, HIPAA, ISO 27001, and GDPR compliance, Impanix can help. Book a Free consultation call with our experts or email us at [email protected] for inquiries.

A Complete Guide To SOC 2 Vs HIPAA Compliance