Optum Financial Lawsuit Filed Over Allegedly Unlawful Junk Fees Added to Online COBRA, FSA/HSA Payments

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A proposed class action lawsuit alleges that Optum Financial, Inc. and ConnectYourCare, LLC unlawfully and deceptively add junk fees to online payments for continuing healthcare coverage.

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The 28-page lawsuit claims that Optum Financial, a third-party benefits administrator, deceptively and illegally tacks on a $20 “processing fee” to monthly online payments for healthcare benefits, including those available via COBRA and deposits into flexible spending accounts (FSAs) or health savings accounts (HSAs). The case accuses Optum of exploiting vulnerable consumers who’ve experienced significant life changes and are “desperate to keep their healthcare coverage.”

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), workers and their dependents can temporarily continue their employer-sponsored health benefits for up to 18 or 36 months after losing insurance coverage due to certain qualifying events, such as termination, reduced hours, divorce, and more, the case explains. Per the lawsuit, in typical circumstances, consumers bear the full cost of COBRA insurance premiums, which the suit says presents a “significant financial burden.”

The case contends that the $20 “processing fee” levied by Optum on all one-time monthly premium payments made online for COBRA and/or FSA or HSA deposits is no more than a deceptive junk fee because it provides no benefit to consumers, is not adequately disclosed during the COBRA sign-up or payment process, appears only late in the transaction, and is presented as mandatory.

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The filing argues that Optum’s junk fees violate federal law, which stipulates that consumers can be charged at most a two-percent fee for administrative expenses associated with COBRA health coverage.

“For example, if the total cost of the health plan is $700.00, then the COBRA participant cannot be charged more than a $14.00 fee ($700.00 x .02) in addition to the $700.00 for coverage, for a total cost of $714.00 to access that coverage,” the complaint states.

According to the filing, Optum already charges consumers the permissible two-percent administrative fee, meaning the additional $20 fee is unlawful and provides no additional value.

The case also alleges that Optum does not inform consumers that the $20 fee will be added to every monthly payment regardless of the form of payment or payment amount, and instead conceals the fee until after a consumer has completed a lengthy registration process and reached the checkout page. The benefits administrator also fails to provide consumers with information about alternate forms of payment, if available, to avoid the undisclosed fee, the complaint states.

The lawsuit goes on to mention that consumers are not given the option to pay for more than one month of coverage at a time through a single online payment, meaning someone who wants to preemptively pay for six months of COBRA, FSA, or HSA coverage must make six separate payments and incur six unavoidable $20 fees.

The suit says that healthcare benefits administration is “big business” for Optum, which reportedly processes over $500 billion in annual healthcare payments and generates substantial revenue from, among other things, the $20 junk fee.

 “The Fee is simply the exploitation of an opportunity to gouge already struggling consumers who are desperate to keep their health care coverage for themselves and their families,” the filing asserts.

The Optum Financial class action lawsuit looks to cover all individuals in the United States who were charged the fee by Optum in relation to COBRA coverage, FSAs and HSAs during the fullest period allowed by law.

Learn all about the legal process: What is a class action lawsuit?