HR professionals handle an immense amount of health information while conducting their daily work, and it has become so routine that it is easy to forget that they have access to one of the most valuable targets for cybercriminals. This is why data security and HIPAA compliance are not optional for HR departments.
Your company might not consider itself a healthcare provider. Still, if you sponsor a group health plan or work with benefits vendors who process Protected Health Information (PHI), HIPAA does apply. With breaches that average $7.42 million per incident, being proactive about benefits data security is also a smart business move to protect your bottom line.
Why Are HR Teams Prime Targets for Data Breaches?
Your company’s HR systems are a treasure trove of information that has great appeal to cyberthieves, including banking details, Social Security numbers, medical histories, insurance enrollment forms, and addresses, to name just a few. All of these data points are potential points of entry for cybercriminals. The 2024 Verizon Data Breach Investigations Report notes that 68% of data breaches involve the human element, including phishing attacks and weak passwords.
The situation continues to intensify. A Ponemon Institute report revealed that an alarming 92% of healthcare organizations were the subject of at least one cyberattack during the past 12 months, and 69% reported that the attack disrupted patient care. Unfortunately, when your benefits portal is compromised, data is only part of the problem; you can also lose customer trust and draw long-term regulatory scrutiny.
For 14 straight years, healthcare has carried the unwelcome distinction of being the most expensive industry for data breaches. This is unlikely to change any time soon, which means HR leaders must prioritize proper data security.
How HIPAA Actually Applies to Your Organization
Some employers mistakenly believe that HIPAA doesn’t apply to them. However, anyone who sponsors a self-insured group health plan could be subject to HIPAA’s Privacy and Security Rules. Even if your organization is not technically a “covered entity,” partnering with insurance carriers or third-party administrators makes you a business associate, which requires strict compliance. HIPAA violations can result in penalties that range from $100 to $50,000 per violation.
Enforcement patterns have changed in the last few years. The Office for Civil Rights (OCR) now carefully examines whether organizations conduct thorough, enterprise-wide security risk analyses. This means that when a breach occurs, regulators aren’t just evaluating the incident itself but also scrutinizing your full compliance posture prior to the breach.
What the 2025 HIPAA Updates Mean for Your Benefits Administration
HIPAA recently underwent some of its most significant changes in years, with the Department of Health and Human Services tightening some implementation specifications. For example, multi-factor authentication (MFA) is no longer treated as optional. Businesses must now implement MFA across all of their access points to electronic PHI. This means users must verify their identity with multiple credentials before gaining access to sensitive information and systems.
Similarly, encryption is now mandatory for electronic PHI in transit and at rest. That way, even if unauthorized entities manage to intercept it, they will not be able to read or use it.
Steps HR Can Take to Strengthen Data Security
- Begin with the fundamentals: conduct a thorough analysis of your security risks and carefully document everything so you’ll be prepared if OCR makes inquiries.
- If you haven’t implemented MFA yet, it’s time to enable it across all systems that handle employee benefits data. Don’t forget to include your benefits portals, third-party administrator access points, and payroll platforms.
- Both during transmission and while your data is stored, make certain that sensitive data is encrypted. Review your current systems to make sure there are no gaps that could inadvertently expose your PHI.
- Keep your team up to date with the latest training on recognizing phishing and on password security and data handling best practices.
- Consider conducting professional simulated phishing tests to uncover vulnerabilities before attackers can exploit them.
- Make sure each user of your business systems can access only what they need to perform their job responsibilities. Review these permissions at scheduled intervals and revoke access for employees who have moved on to different roles or left the business entirely.
- Strictly vet all of your vendors, as every third-party administrator, payroll provider, and benefits platform you work with introduces potential security gaps.
- Develop an incident response plan and rehearse it.
How Employee Benefits Consulting Firms Can Help
HIPAA compliance is so complex that it often demands full-time attention, making it difficult for busy HR departments to manage. Experienced employee benefits consulting firms can provide valuable support for compliance, risk assessments, and vendor management, helping businesses with modest budgets and resources implement affordable cybersecurity measures while establishing that their benefits administration meets the latest regulatory standards.
Protecting your employee benefits data isn’t just about avoiding fines; it’s about maintaining the trust your employees place in you when they share their most sensitive information. With healthcare breaches exposing more than 275 million records in 2024 alone, the question is no longer whether your business could be a target but whether you will be prepared for it when it happens.
Contact BBG for Benefits Administration Excellence
For nearly three decades, Business Benefits Group has helped businesses make sense of employee benefits and regulatory compliance. Our team can provide professional guidance on HIPAA compliance, data security best practices, and complete benefits administration to protect your employees and your organization. Contact us today to strengthen your benefits data security and make sure your compliance program meets the latest regulatory standards.