Which entities are considered 'covered entities' under HIPAA?

The correct answer identifies 'covered entities' as health plans and healthcare providers who transmit health information electronically. Under HIPAA, a covered entity includes three categories: healthcare providers who conduct certain transactions in electronic form, health plans, and healthcare clearinghouses.

Healthcare providers encompass a broad range of professionals and institutions that deliver care, including hospitals, clinics, and individual practitioners, as long as they electronically store or transmit health information. Health plans refer to entities that provide or pay for health services, such as insurance companies and managed care organizations. The defining factor is that these entities handle protected health information (PHI) and must comply with HIPAA regulations to ensure privacy and security of this sensitive data.

Understanding these definitions helps clarify why other options are too limited in scope. For instance, solely identifying health insurance companies, healthcare providers, or hospitals and clinics as covered entities ignores the broader landscape of health-related organizations that fall under HIPAA regulations. Thus, the comprehensive definition of covered entities incorporates not just a single type but a variety of organizations involved in the electronic transmission and management of health information.