Quick Answer
The answer is that a valid Business Associate Agreement (BAA) under HIPAA must include procedures for breach notification, along with specifying the permitted and required uses of Protected Health Information (PHI) and ensuring that the business associate will report any security incidents. These three elements are mandated by HIPAA §164.504(e)(2) to guarantee that a business associate does not misuse or improperly disclose PHI, and that the covered entity is promptly informed of any breaches or unauthorized access. On the CompTIA SecurityX CAS-004 exam, this topic tests your understanding of the contractual safeguards required when sharing PHI with third parties, often appearing in scenario-based questions where you must distinguish mandatory BAA clauses from optional or prohibited terms. A common trap is confusing the requirement to report breaches with the separate requirement to mitigate harm—only reporting is mandatory in the BAA itself. To remember the core trio, think “Uses, Breaches, Reports”: the BAA must define permitted uses, require breach notification, and mandate reporting of security incidents.
This CAS-004 practice question tests your understanding of governance, risk and compliance. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
Which THREE of the following are required for a valid Business Associate Agreement (BAA) under HIPAA? (Select THREE)
Indemnification clause for breaches
Why wrong: Not required by HIPAA
Permitted and required uses of PHI
Must be specified
Requirement to store data in the United States
Why wrong: Not a HIPAA requirement
Safeguards to protect PHI
Required
Procedures for breach notification
Required
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Permitted and required uses of PHI
A Business Associate Agreement (BAA) must specify the permitted and required uses of Protected Health Information (PHI) by the business associate. This is a core requirement under HIPAA §164.504(e)(2)(i) to ensure the business associate does not use or disclose PHI beyond what is authorized by the covered entity or required by law.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
Indemnification clause for breaches
Why it's wrong here
Not required by HIPAA
Permitted and required uses of PHI
Why this is correct
Must be specified
Related concept
Read the scenario before looking for a memorised answer.
Requirement to store data in the United States
Why it's wrong here
Not a HIPAA requirement
Safeguards to protect PHI
Why this is correct
Required
Related concept
Read the scenario before looking for a memorised answer.
Procedures for breach notification
Why this is correct
Required
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
Cisco often tests the distinction between mandatory BAA elements (permitted uses, safeguards, breach notification) and optional contractual terms (indemnification, data storage location) to see if candidates confuse common business contract clauses with HIPAA regulatory requirements.
Detailed technical explanation
Under HIPAA, a BAA must include specific provisions such as the permitted and required uses of PHI, appropriate safeguards (administrative, physical, technical) per §164.306, and breach notification procedures per §164.410. The BAA also must require the business associate to report breaches to the covered entity without unreasonable delay, but no later than 60 days after discovery, as specified in the HIPAA Breach Notification Rule. In practice, a BAA often includes data use and disclosure restrictions that mirror the covered entity's Notice of Privacy Practices.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A security administrator must allow nursing staff to reach a patient records server while blocking access from the guest Wi-Fi VLAN. After applying an extended ACL, traffic is still blocked from nursing workstations. The ACL was applied outbound instead of inbound on the wrong interface. Questions like this test ACL direction and placement rules.
What to study next
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FAQ
Governance, Risk and Compliance — This question tests Governance, Risk and Compliance — Read the scenario before looking for a memorised answer..
The correct answer is: Permitted and required uses of PHI — A Business Associate Agreement (BAA) must specify the permitted and required uses of Protected Health Information (PHI) by the business associate. This is a core requirement under HIPAA §164.504(e)(2)(i) to ensure the business associate does not use or disclose PHI beyond what is authorized by the covered entity or required by law.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 11, 2026
This CAS-004 practice question is part of Courseiva's free CompTIA certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the CAS-004 exam.
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