What is the difference between SOC 2 vs HIPAA compliance?

Updated: 14 hours ago


Vector Representation of SOC 2 vs HIPAA Compliance
SOC 2 vs HIPAA Compliance: What’s the Difference?

We get plenty of questions about SOC 2 and HIPAA audits. Which is important? Should your company need both? Keep reading the article to learn about the similarities and differences between SOC 2 and HIPAA.

What is a SOC 2 audit?

SOC 2 is an audit process developed by the American Institute of Certified Public Accountants (AICPA) to evaluate an organization's ability to securely manage and use customers' data during everyday business operations.

There are 2 types of SOC 2 reports. A SOC 2 Type 1 report addresses how the organization's system controls are designed at a specific time. In contrast, a SOC 2 Type 2 report assesses how effectively those controls are operated over a period of time.

Why is the SOC 2 audit important?

There are two reasons why SOC 2 compliance is important for service organizations, especially those that deliver SaaS applications and cloud services or rely on the cloud to serve their clients best:

  • SOC 2 compliance helps organizations protect their customer's data.

  • SOC 2 compliance is well-suited to meet typical cloud computing concerns.

What is the process of SOC 2 Certification?

SOC 2 compliance is based on Trust Service Criteria (TSCs). They are used to evaluate and report the suitability of the design and operating effectiveness of controls relevant to the following principles;

  1. Security

  2. Availability

  3. Processing Integrity

  4. Confidentiality

  5. Privacy

These 5 Trust Service Criteria act as the evaluation structure of the SOC 2 audit and report. Out of the 5 TSCs, all the SOC 2 reports must include the Security Trust Service Criteria. The other 4 TSCs are optional and can be added to the report at the discretion of management.

To have a seamless SOC 2 audit process, here are the steps that every organization must follow:

1. Choose SOC 2 report type: Type 1 or Type 2

2. Define the scope of the audit

3. Conduct a gap assessment

4. Readiness assessment

5. Select the audit

6. Begin the formal audit

What is HIPAA?

HIPAA (Health Insurance Portability and Accountability) is a federal law that sets a national standard to protect patients' health records and other personal health information. The HIPAA rule describes "protected health information" as health information that:


  1. Identifies a person

  2. And is stored or exchanged digitally or in hard copy.


The patient's personal information is safeguarded if it contains details used to identify a person. And as long as the data is under the control of a covered entity or a business associate, the protection would continue to apply. The protection applies to individually identifiable information in any form, electronic or non-electronic.


Why is HIPAA important?

HIPAA has helped streamline administrative healthcare procedures, increasing productivity in the sector and ensuring that patients' personal information (PI) is shared securely.

The infosec standards for recording health data and electronic transactions ensure that personal information is shared securely between healthcare providers, health plans, and other entities.


Not understanding HIPAA rules or deliberately violating security procedures will lead to heavy fines and obligatory structural reorganization.


How to become HIPAA compliant?

To achieve HIPAA certification, here are the steps that every organization must follow:

1. Create Security and Privacy Policies for the Organization

2. Identify HIPAA security and privacy Officer

3. Implement Security Safeguards

4. Regularly Conduct Risk Assessments and Self-Audits

5. Maintain Business Associate Agreements

6. Establish a Breach Notification Protocol

7. Document Everything


What are the similarities between SOC 2 and HIPAA?

Although the responsibilities of HIPAA-covered entities and business associates vary, it is equally important to pursue a SOC 2 attestation. Here are a few similarities between SOC 2 and HIPAA:

Data Encryption

SOC 2 and HIPAA require organizations to always encrypt customers' sensitive data. In addition, any data repositories that store sensitive data should be encrypted by default.


Password Policy

The SOC 2 and HIPAA standards emphasize the importance of implementing a central password management system to enforce secure passwords and control access to apps. Although a password management system improves security, users should still choose their own passwords, making them easier to remember than computer-generated passwords.


Vendor Risk Assessment Report

To pass audits like HIPAA and SOC 2, vendors must conduct vendor risk assessments (VRAs). Vendor risk evaluations can be challenging to carry out. However, neglecting to finish VRAs frequently leads to reputation damage, revenue loss, legal costs, and fines. So don't skip or skim the VRA process. In the long term, VRAs will help you choose better partners aligned with your security and compliance standards.


Business Code of Conduct and Ethics Reviews

Organizations and covered entities must create a code of conduct and ethics and review it annually to comply with SOC 2 and HIPAA. A well-written code of conduct clearly defines an organization's vision, values, and guiding principles and links them with standards of professional conduct. All employees must acknowledge the code of conduct during onboarding or any substantial changes.

What is the difference between SOC 2 and HIPAA?

Although SOC 2 and HIPAA have many similarities, they differ in a few aspects. Let's look at some of the differences between them.


Purpose of the report

HIPAA regulates how healthcare organizations and their business partners handle PHI in the U.S. In contrast, SOC 2 is an auditing procedure that assesses your organization's capacity to safely manage the data you collect and use for business purposes. Typically, businesses pursue SOC 2 because a client or prospect requests it.

Cost of the report

SOC 2 and HIPAA have unique compliance journeys, and multiple factors come into the picture when assessing them. A SOC 2 report is much more inexpensive than HIPAA.


The Cost of a SOC 2 audit depends on the Trust Service Criteria (TSC) your organization chooses. Although estimated HIPAA expenditures are provided by the Office for Civil Rights of the US Department of Health and Human Services, the amount they give, $1,040, is probably arbitrary and is not an accurate representation of implementation expenses. It is estimated that small covered companies or business partners will spend between $4,000 and $12,000. It's simple, price increases with size.


Time

Undergoing SOC 2 or HIPAA compliance depends on the structure of an organization. Typically, a SOC 2 audit will take up to 6 months to complete, depending on the Trust Service Criteria (TSC) the organization chooses.


Whereas undergoing HIPAA compliance depends on the healthcare organization. Typically, it takes,

  1. 2-3 years for hospitals and large healthcare organizations.

  2. 1- 2 years for medium-sized healthcare organizations

  3. up to 6 months for single-location healthcare and business associates


Data Processing Integrity Policy and Procedure

Data is considered the key while collecting, storing, and analyzing data. And thus, SOC 2 instructs organizations to determine and describe the types of data required to support a product or service. In contrast, HIPAA does not require any data diagnosis.


Data Breach Notification

Under HIPAA, organizations are supposed to notify their business entities about the data breach within 60 days of a breach. In contrast, SOC 2 has no rules regarding data breach notification.


Summary

Although there are similarities between SOC 2 and HIPAA, their objectives and users are different. A SOC 2 provides criteria for protecting data, whereas a HIPAA report has additional prerequisites that need to be met. A SOC 2 report alone will not be enough to demonstrate that an organization complies with the HIPAA Security Rule.


Scrut Automation is a smart and radically simple Governance, Risk, and Compliance automation platform for growing startups and mid-market enterprises. With Scrut, Compliance teams can reduce ~70% of their manual effort in continuously maintaining compliance towards SOC 2, ISO 27001, GDPR, PCI DSS, and privacy laws like HIPAA, GDPR, and CCPA. Schedule your demo today to see how it works.


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