Quick answer
If you're a healthcare SaaS company — or any software company whose product touches protected health information — the answer is almost certainly yes, you need both. But they serve entirely different purposes:
HIPAA is a federal law. If you handle PHI, compliance is not optional — it's a legal obligation with civil and criminal penalties. SOC 2 is a voluntary auditing standard. It's not legally required, but enterprise healthcare customers — hospitals, health systems, payers — will demand it before they sign a contract with you.
The good news: they overlap more than most people realize. If you've done the work to become HIPAA compliant, you're already 50–60% of the way to SOC 2. The question isn't really whether to do both — it's how to sequence them efficiently so you're not running two parallel programs.
What HIPAA requires
HIPAA — the Health Insurance Portability and Accountability Act — applies to two categories of organizations: covered entities (healthcare providers, health plans, healthcare clearinghouses) and their business associates (vendors that create, receive, maintain, or transmit PHI on a covered entity's behalf).
If you're a SaaS company whose software processes, stores, or transmits PHI for healthcare customers, you're a business associate. HIPAA applies to you whether or not you've signed a Business Associate Agreement — though you must have BAAs in place with all covered entity customers.
🏥 HIPAA applies if you...
- Are a covered entity: healthcare provider, health plan, or clearinghouse
- Are a business associate: any vendor that handles PHI on behalf of a covered entity
- Build software that stores, processes, or transmits patient health information
- Provide cloud storage, analytics, billing, or any service where PHI is involved
HIPAA has three main rules that affect technology companies:
- Security Rule — Technical, administrative, and physical safeguards for electronic PHI (ePHI). This is where most of the overlap with SOC 2 lives.
- Privacy Rule — How PHI can be used and disclosed. Governs minimum necessary use, patient rights, and Notice of Privacy Practices.
- Breach Notification Rule — What you must do when PHI is improperly accessed or disclosed. 60-day notification window to affected individuals and HHS.
For a detailed breakdown of every required and addressable control, see our HIPAA compliance checklist.
What SOC 2 requires
SOC 2 is an auditing standard developed by the AICPA (American Institute of CPAs). It's not a law — it's a framework that lets a licensed CPA firm evaluate and attest to your security controls against the Trust Service Criteria.
Unlike HIPAA, there's no regulator enforcing SOC 2. The enforcement is the market: your enterprise customers won't sign contracts without it, procurement teams block deals pending the report, and security questionnaires ask for it by default.
🔐 SOC 2 is relevant if you...
- Sell to enterprise customers who require it in their vendor assessment process
- Store or process customer data of any kind
- Are asked for it in security questionnaires or RFPs
- Want to accelerate deals that are stalling at security review
- Sell into healthcare, finance, government, or any regulated industry
SOC 2 is organized around Trust Service Criteria (TSC). Security (CC) is always required. Availability, Confidentiality, Processing Integrity, and Privacy are optional — though for healthcare SaaS, Availability and Confidentiality are almost always expected.
For the full process, see our SOC 2 compliance guide.
Side-by-side comparison
| Factor | HIPAA | SOC 2 |
|---|---|---|
| Type | Federal law — mandatory | Voluntary auditing standard |
| Who it applies to | Covered entities and business associates handling PHI | Any company storing/processing customer data |
| Enforced by | HHS Office for Civil Rights (OCR) | Market demand — customers require it |
| Auditor type | No formal audit requirement; internal or third-party assessment | Must be a licensed CPA firm |
| Report output | No standardized report; assessment documentation | Formal Type I or Type II report shared with customers |
| Scope | PHI specifically — health information only | All customer data across systems in scope |
| Privacy requirements | Extensive — Privacy Rule governs use and disclosure of PHI | Optional Privacy TSC; less prescriptive |
| Penalties for non-compliance | $100–$50,000 per violation; up to $1.9M per category per year; criminal charges possible | No legal penalty — but lost deals and reputational damage |
| Renewal cadence | Ongoing — continuous compliance obligation | Annual Type II re-audit typical |
Where they overlap — and where they don't
The overlap is real and substantial. HIPAA's Security Rule and SOC 2's Common Criteria were designed around the same fundamental security principles. If you've built your HIPAA security program properly, you've already done the hard work for a large portion of SOC 2.
✓ Controls that satisfy both
- Logical access controls and user provisioning
- Encryption in transit and at rest
- Audit logging and monitoring
- Incident response plan and procedures
- Risk assessment process
- Vendor / business associate management
- Physical security controls
- Employee security training
- Vulnerability management
△ Where they diverge
- HIPAA only: PHI minimum necessary use
- HIPAA only: Notice of Privacy Practices
- HIPAA only: Patient rights (access, amendment)
- HIPAA only: 60-day breach notification to HHS
- SOC 2 only: Formal change management documentation
- SOC 2 only: Structured access review cadence with evidence
- SOC 2 only: Availability and confidentiality commitments
- SOC 2 only: System description documentation
Important: A SOC 2 report does not satisfy HIPAA compliance. And HIPAA compliance does not produce a SOC 2 report. They serve different audiences — OCR vs. your customers — and must be maintained separately, even when the underlying controls overlap.
Do you actually need both?
Work through this decision path:
If yes, HIPAA applies — full stop. This isn't a business decision, it's a legal one. HIPAA required
If you're selling to hospitals, health systems, payers, or any enterprise healthcare buyer, the answer is almost certainly yes. SOC 2 is now table stakes for enterprise healthcare SaaS. SOC 2 required
If security questionnaires are creating friction or deals are waiting on compliance documentation, that's the market telling you it needs SOC 2. Get both
The typical healthcare SaaS company needs both. The rare exception is a very early-stage company not yet selling to enterprises — in which case HIPAA still applies if PHI is involved, but you may have a window before SOC 2 becomes urgent.
Which should you do first?
HIPAA first, always — if it applies to you. HIPAA is a legal obligation. SOC 2 is a market credential. You don't get to choose the order when one of them involves federal law and OCR enforcement. Get HIPAA right, then use that foundation to accelerate SOC 2.
The practical reason this sequence also makes financial sense: your HIPAA controls are the foundation of your SOC 2 program. If you try to do SOC 2 first without HIPAA controls in place, you're building twice. If you do HIPAA first, the delta to SOC 2 is manageable — typically a few months of targeted remediation rather than a full program build.
How to pursue both efficiently
The goal is one security program that satisfies both, not two parallel programs. Here's the sequence that works:
-
Complete your HIPAA Security Rule gap assessment Identify every required and addressable safeguard you're missing. Prioritize the required ones — those have no flexibility. Get your BAAs signed with all covered entity customers and your key vendors.
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Remediate HIPAA gaps Fix the control gaps. As you build each control — access management, encryption, audit logging, incident response — document it in a way that will satisfy SOC 2 auditors too. The documentation investment pays off twice.
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Run a SOC 2 gap assessment against what you've built Once your HIPAA program is solid, assess your SOC 2 readiness. Use a free gap assessment to identify the delta. You'll typically find a shorter gap list than you expected.
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Close the SOC 2-specific gaps The most common gaps for HIPAA-compliant companies pursuing SOC 2: formal change management documentation, structured quarterly access reviews with evidence, and a written vendor risk management program (beyond just BAAs).
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Start your SOC 2 observation period Begin the 6-month minimum window. Your HIPAA controls that overlap with SOC 2 Common Criteria are already running — just make sure the SOC 2-specific controls are operating cleanly and generating evidence throughout.
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Consider a combined audit engagement Many CPA firms offer HIPAA assessments alongside SOC 2 audits. Running both with the same firm in the same cycle shares evidence collection, reduces team disruption, and often comes at a lower combined cost. Ask auditors about this upfront.
Find out where your gaps actually are
Run a free gap assessment to see which HIPAA and SOC 2 controls you're missing — and what it would take to close them.
Start Free Assessment →Frequently asked questions
It depends on what you do and who your customers are. HIPAA is legally required if you're a covered entity or business associate that handles protected health information (PHI). SOC 2 is not legally required but is increasingly demanded by enterprise healthcare customers, health systems, and payers as a condition of doing business. If you're a healthcare SaaS company, you almost certainly need both.
HIPAA is a US federal law with mandatory requirements for any organization that handles protected health information. Non-compliance carries civil and criminal penalties. SOC 2 is a voluntary auditing standard developed by the AICPA that demonstrates security controls to customers and prospects. HIPAA is compliance with the law; SOC 2 is a trust signal for enterprise sales. They serve different purposes and are evaluated differently.
Partially. SOC 2's Security criterion (Common Criteria) overlaps significantly with HIPAA's Security Rule — both require access controls, encryption, audit logging, incident response, and vendor management. But SOC 2 does not cover HIPAA's Privacy Rule, Breach Notification Rule, or PHI-specific requirements like minimum necessary use. A SOC 2 report does not satisfy HIPAA compliance obligations.
Yes, significantly. Organizations that are already HIPAA compliant typically have 50–60% of the controls needed for SOC 2 Type II already in place. The Security Rule's technical and administrative safeguards map closely to SOC 2 Common Criteria. The main gaps are usually around formal change management documentation, vendor risk management programs, and the structured cadence of access reviews SOC 2 auditors expect.
A Business Associate Agreement is a contract required by HIPAA between a covered entity (hospital, insurer, healthcare provider) and any vendor that creates, receives, maintains, or transmits PHI on their behalf. If you're a SaaS company whose product touches PHI, your healthcare customers are required to have a BAA with you before they can use your product. Operating without a BAA exposes both parties to significant HIPAA penalties.
Yes, and it's often the most efficient approach. Many CPA firms with SOC 2 practices also offer HIPAA assessments. Running both in the same audit cycle allows shared evidence collection, reduces team disruption, and often comes at a lower combined cost than two separate engagements. Ask auditors about combined pricing if you need both.
The strongest overlaps are between HIPAA's Security Rule and SOC 2 Common Criteria: access management and logical access controls, encryption in transit and at rest, audit logging and monitoring, incident response planning and procedures, risk assessment processes, and vendor and business associate management. Controls that HIPAA requires but SOC 2 doesn't specifically address include PHI minimum necessary use, Notice of Privacy Practices, and Breach Notification Rule procedures.
HIPAA first, always — if it applies to you. HIPAA is a legal obligation with civil and criminal enforcement. SOC 2 is a voluntary market credential. Get HIPAA right first, then use that foundation to accelerate your SOC 2 program. The controls you build for HIPAA give you a significant head start on SOC 2 readiness.