A former Humana employee filed a class-action lawsuit March 17 alleging the insurer improperly deducted a tobacco surcharge as part of its medical coverage, according to a court filing in the U.S. District Court for western Kentucky.
The complaint said Humana employees who were tobacco users faced $40 deductions per paycheck, adding up to $80 per month and $960 per year. Under the Employee Retirement Income Security Act, health-contingent wellness programs can exist only if there is a reasonable alternative for employees encountering higher charges due to a specific health factor, this standard is clearly communicated and employees can access the same financial benefit for the plan year if they complete said alternative.
In this case, the lawsuit said Humana may have allowed tobacco users to complete a smoking cessation program. However, Humana never disclosed the ability to obtain a refund of the surcharges in its summary plan description or other plan materials.
“Defendants cannot take advantage of the statutory safe harbor and, therefore, the surcharge functions as a penalty rather than a compliant wellness incentive,” the complaint said.
The filing also alleged Humana used the surcharges to offset its own contributions to the health plan, which the company may have accrued interest on.
Along with other forms of relief, the lawsuit requests reimbursement and removal of the plan’s fiduciaries. The civil cover sheet outlines a demand for $5 million.
According to the lawsuit, Humana’s employee health plan included more than 60,000 members as of the end of 2024. The class action is open to U.S.-based individuals who paid the surcharge for the health plan at some point since 2014.
These surcharges — and surrounding scrutiny — are not new. In 2023, Virginia passed legislation banning surcharges for tobacco users under ACA plans. In 2024, monthly premiums dropped between $25 and $123 for tobacco users, but premiums overall increased $3.80 per member per month to compensate.
Becker’s contacted Humana and will update this story if more information becomes available.
