The adoption of cloud-based rule systems for eligibility determination has revolutionized how organizations process and manage sensitive data across various sectors, including healthcare, government, and finance. However, this technological shift introduces complex challenges in maintaining data security and regulatory compliance. This article presents a comprehensive analysis of the key security risks and compliance requirements associated with cloud-based eligibility determination systems. It examines the implications of handling sensitive personal, health, and financial data in cloud environments, exploring vulnerabilities such as data breaches, multi-tenancy risks, and challenges in data sovereignty. The article further investigates the intricate landscape of regulatory frameworks, including HIPAA, GDPR, FISMA, and SOC 2, elucidating their impact on system design and operation. By synthesizing current research and industry best practices, this paper proposes a robust framework for implementing secure and compliant cloud-based rule systems. The proposed strategies encompass advanced encryption techniques, stringent access controls, regular security audits, and vendor risk management, offering a holistic approach to mitigating risks while maintaining operational efficiency. This article contributes to the growing body of knowledge on cloud security and compliance, providing valuable insights for organizations seeking to leverage cloud technologies in eligibility determination processes while safeguarding sensitive information and adhering to evolving regulatory standards.