9 Definitions for COBRA Terms You Should Know

When it comes to COBRA administration, the terms, deadlines and steps for offering and administering COBRA are specific and time-consuming. That’s why about half of all human resources professionals say their companies outsource some or all of their COBRA administration to third-party administrators. To help familiarize you with COBRA and the important specifics, we’ve compiled a list of key COBRA-related terms and their definitions you can use for reference. 

Effective date

The date when a participant’s COBRA becomes active.

General Rights Notice (GRN)

A written summary of COBRA rights and obligations. This notice is provided to new plan participants within 90 days of when group health plan coverage first begins.

Open enrollment

A period of time, generally at the same time each year, when plans can be added or changed. Open enrollment is also the time when dependents can be added to plans and when participants are notified of any rate changes.

Participant

Any individual covered by a health plan through COBRA.

Premium

The amount a COBRA participant pays to extend coverage.

Qualified beneficiary

An individual who is entitled to COBRA coverage because they were covered by a group health plan at least one day prior to experiencing a qualifying event.

Qualifying event

An event that causes an individual to lose health coverage. There are seven types of qualifying events:

• Termination (except in the cases of gross misconduct)
• Reduction of hours
• Death of employee
• Divorce or legal separation from employee
• Loss of dependent status
• Medicare entitlement of employee
• Employer bankruptcy

Specific Rights Notice (SRN)

A written notice outlining COBRA rights and obligations, including election forms. SRNs must be provided to all qualified beneficiaries within 14 days of receiving notice of a qualifying event.

Summary Plan Description (SPD)

A document that explains the fundamental features of an employer’s group health plans, including eligibility requirements, contribution formulas, vesting schedules, benefits calculations and distribution options.

The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel.