Why is encryption important for HIPAA compliance?

Electronic health records (EHRs), telemedicine, and digital communication platforms have revolutionized patient care, but they’ve also introduced new cybersecurity risks. As healthcare organizations handle vast amounts of electronic protected health information (ePHI), encryption has become a central component of data protection and HIPAA compliance.

As of now, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security Rule has not yet formally changed the status of “addressable” implementation specifications into universally mandatory ones. According to the current law and official guidance from the U.S. Department of Health and Human Services (HHS), encryption remains an addressable specification under the Security Rule. 

However, significant proposed changes are underway that would make many of the previously addressable specifications mandatory, including encryption.

What is encryption?

Encryption is the process of converting data into a coded form, making it unreadable to anyone without the necessary decryption key. This security measure provides an extra layer of protection for sensitive data, particularly valuable for PHI, which includes any information that can be used to identify a patient. By encrypting PHI, healthcare organizations can reduce the likelihood of unauthorized access and breaches, protecting both patient privacy and their own reputations.

Go deeper: What is encryption? 

What the current rule says

Under the current rules, the implementation specifications for encryption are “addressable” in the regulations:

• 45 CFR § 164.312(a)(2)(iv) states that regulated entities should “implement a mechanism to encrypt and decrypt electronic protected health information.” 
• 45 CFR § 164.312(e)(2)(ii) requires regulated entities to “implement a mechanism to encrypt electronic protected health information whenever deemed appropriate.” 

However, “addressable” doesn’t mean optional in the sense of “you don’t do it and you’re fine.” It means the regulated entity must assess whether the safeguard is reasonable and appropriate given its environment, via its risk assessment. If it decides the safeguard isn’t reasonable/appropriate, then the entity must document that decision and implement an alternative that provides equivalent protection. 

From HHS’s FAQ: “No. The final Security Rule made the use of encryption an addressable implementation specification. See 45 CFR § 164.312(a)(2)(iv) and (e)(2)(ii). The encryption implementation specification is addressable, and must therefore be implemented if, after a risk assessment, the entity has determined that the specification is a reasonable and appropriate safeguard in its risk management of the confidentiality, integrity and availability of e-PHI.”

Therefore, currently, you cannot say encryption is strictly mandatory under HIPAA in all cases, rather, you say it is strongly recommended and, almost always, the best choice, but the rule allows for documented alternatives.

What’s changing: The proposed Rule

On December 27, 2024, HHS published a Notice of Proposed Rulemaking (NPRM) to modernize the Security Rule. One of the key proposed changes is to eliminate the distinction between “required” and “addressable” implementation specifications, making all specifications mandatory. 

The NPRM explicitly states that encryption of ePHI, both at rest and in transit, would become required. 

However, this is still a proposed rule, not finalized. The final rule is not yet effective. Until HHS issues a final rule and a compliance date is set, the current rule (with addressable specs) continues to apply.

Go deeper: HHS proposes updated HIPAA security rule

Benefits of encryption

According to IBM, the benefits of encryption include:

Data security during transmission and storage

“Encryption is among the most critical and widespread data security tools. By encoding plain text as ciphertext, encryption helps organizations protect data against a range of cyberattacks, including ransomware and other malware,” says IBM. In healthcare, where data is often transmitted over email, messaging platforms, and other communication tools, encryption protects electronic protected health information (ePHI). When ePHI is encrypted, even if it is intercepted by an unauthorized person, they cannot access the information without the correct decryption key. Similarly, encryption protects stored data, ensuring that unauthorized access to servers, laptops, or other storage devices does not compromise patient privacy.

Cloud security

“While cloud service providers (CSPs) are responsible for the security of the cloud, customers are responsible for security in the cloud, including the security of any data. Enterprise-wide data encryption can help organizations protect their sensitive data on-premises and in the cloud.” Implementing enterprise-wide encryption ensures that ePHI remains protected across on-premises servers, hybrid setups, and cloud environments, reducing risks from data movement and remote access.

Builds patient trust through compliance

Many industries and jurisdictions require encryption to protect sensitive data. For healthcare organizations, the HIPAA Security Rule now explicitly mandates encryption as part of their administrative, physical, and technical safeguards. Using strong encryption helps organizations maintain compliance, prevent regulatory penalties, and support patient trust by demonstrating a proactive commitment to privacy and data protection.

Data integrity assurance

Encryption works alongside cryptographic hash functions to detect any unauthorized changes or tampering of ePHI. This ensures the accuracy, integrity, and reliability of patient records and medical data, maintaining the trustworthiness of healthcare systems and research databases.

Secure communications

Encrypted communication channels, such as secure email, telehealth platforms, and file transfers, enable healthcare professionals to share patient data, billing information, and test results safely. It “keeps communication channels secure, allowing individuals and organizations to exchange sensitive information, conduct transactions and collaborate with a reduced risk of interception.”

Protection against insider threats

Encryption limits data access to “users that have the appropriate decryption keys. This measure helps combat insider threats by preventing employees from intentionally or unintentionally accessing, misusing or misplacing sensitive information.” This means that, even if a healthcare employee’s encrypted laptop or mobile device is lost, the data remains unreadable, minimizing the risk of internal or inadvertent breaches.

See also: HIPAA Compliant Email: The Definitive Guide (2025 Update)

How encryption helps healthcare organizations meet HIPAA compliance

Encryption remains one of the most effective ways to protect patient data and demonstrate compliance with HIPAA’s Security Rule. With the latest HHS updates set to make encryption a mandatory safeguard, its role in healthcare data protection is more important than ever.

Protects data in transit and at rest

Encryption secures ePHI both when it’s transmitted and when it’s stored. In healthcare, data moves constantly, through emails, EHR systems, and telehealth platforms. Mandatory encryption ensures:

• Data in transit is protected through secure channels such as TLS or seamless encryption.
• Data at rest is safeguarded through encrypted databases, cloud storage, and devices.

This dual-layer protection upholds the confidentiality, integrity, and availability of sensitive information, the foundation of HIPAA’s Security Rule.

Prevents unauthorized access

According to HIPAA, “access controls should enable authorized users to access the minimum necessary information needed to perform job functions. Rights and/or privileges should be granted to authorized users based on a set of access rules that the covered entity is required to

implement as part of § 164.308(a)(4), the Information Access Management standard under the Administrative Safeguards section of the Rule.” Under the forthcoming rule changes, failing to encrypt ePHI could be considered a direct violation, potentially leading to fines or corrective actions. Encryption ensures that patient information is viewable only by those who are permitted to see it.

Minimizes breach risk and liability

Even if encrypted data is stolen or intercepted, it remains unreadable without the correct key. According to the Breach Notification Rule, ePHI encrypted to NIST standards is deemed “secured,” meaning organizations are typically exempt from reporting breaches of properly encrypted data. The updated Security Rule reinforces this standardization, simplifying compliance and reducing risk exposure.

Builds patient trust

Beyond compliance, encryption signals a strong commitment to patient privacy. When patients know their information is encrypted according to federal standards, trust and transparency improve. As encryption becomes mandatory, adopting it early demonstrates accountability and positions healthcare organizations as leaders in data protection and ethical care.

Read more: How HIPAA compliance improves patient trust

FAQs

Does encryption alone make my organization HIPAA compliant?

No, encryption is one of many security measures under HIPAA’s Security Rule. To achieve full compliance, healthcare organizations must implement administrative, physical, and technical safeguards to protect ePHI comprehensively, of which encryption is a key component.

If encryption is addressable, should my organization still implement it?

While not mandatory, encryption is highly recommended due to its strong security benefits. If a healthcare organization chooses not to use encryption, they must document this decision and have alternative protections in place. For many, the advantages of encryption make it the preferred safeguard to meet HIPAA's standards.

Can encryption prevent all types of data breaches?

While encryption provides strong protection, it is not foolproof against all threats. Combining encryption with other security measures, like multi-factor authentication (MFA), access controls, and regular security audits, provides a more comprehensive defense.