HIPAA Basics Practice Test 2025 – 400 Free Practice Questions to Pass the Exam

A business associate refers to a person or entity that performs functions or activities on behalf of a covered entity, which are typically related to the use or disclosure of protected health information (PHI). In this context, a document company is an exemplary representation of a business associate because such a company may handle, store, or process health-related documents that contain PHI for a healthcare provider or another covered entity.

For instance, the document company might provide services like medical transcription, record storage, or document destruction, all of which could involve access to PHI. This relationship is governed by a Business Associate Agreement (BAA) that outlines the responsibilities and protections surrounding the handling of this sensitive information.

In contrast, other options like doctors and hospitals are covered entities themselves, as they are directly involved in providing healthcare services and are thus responsible for maintaining the privacy of PHI. An insurance company, while playing a crucial role in healthcare, can also be considered a covered entity when it directly processes health information related to the claims it manages.