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Alabama (AL) Employee Benefits and Privacy Rights Laws

August 18th, 2006 Posted by Justine

In November 2000 the Federal government passed the Gramm-Leach Bliley Act - 15 U.S.C. §§ 6801-6827 (GLBA) that set the precedence for customer privacy. This bill covered Privacy Rights for disclosure of personal information from companies, producers and other persons and entities licensed under each state’s insurance law and included all licensees, health insurers and HMOs because they are considered “financial institutions” under Title V of the GLBA. However, the State of Alabama does not license TPA’s so the requirements do not directly apply to a TPA but only indirectly because the requirements are applicable to the insurer and only by written permission. In addition, workers’ compensation plans are not subject to Alabama State’s Insurance Commissioner’s regulation but is subject to Federal law.

The GLBA permits each state to develop its own compliance regulations. Alabama adopted the NAIC model with minor changes that included a “simplified” Privacy Notice that applied to most agencies in the state and allowed a very brief Privacy Notice to be used.

The Privacy Notices establishes how agencies can collect customer’s information. For example, they can collect information from claim forms, enrollment forms, beneficiary designation/assignment forms and other forms used for administering coverage or paying claims. The type of information they collect includes Social Security number, address, date of birth, phone number, marital status, gender, dependent information, bank account information and employment information. In addition, the notice includes to whom they may disclose the information. Any health information is not shared unless it is allowed under applicable law or if the customer approves the sharing of this information.

The GLBA has set the standard when it comes to customer privacy. All Privacy Notices must be accurate, written clearly and understandably so that customers can understand what information is being collected and how agencies use their information. These notices need to be given to new customers as well as sent out annually to existing customers.