Healthcare finance terms, defined like a human.
Quick definitions for the words that show up on benefits paperwork, hospital bills, and Medicare letters.
401(a)
RetirementAn employer-sponsored retirement plan often used by government and nonprofit employers for mandatory or matching contributions.
403(b)
RetirementA workplace retirement plan for employees of public schools, hospitals, and some nonprofits. Similar in spirit to a 401(k).
457(b)
RetirementA deferred-compensation plan offered by some government and nonprofit employers. Can stack with a 403(b).
Allowed amount
InsuranceThe negotiated price your insurance has agreed to pay an in-network provider for a service.
Benefit period
MedicareA Medicare-specific window that starts when you're admitted as an inpatient and ends after 60 days out of a hospital or skilled nursing facility.
Coinsurance
InsuranceYour share of a covered cost after the deductible, usually expressed as a percentage (e.g. 20%).
Copay
InsuranceA flat fee you pay for a specific service, like $30 for a primary care visit.
Custodial care
CareHelp with daily living — bathing, dressing, eating. Generally NOT covered by Medicare.
Deductible
InsuranceThe amount you pay out of pocket each year before your insurance starts paying most costs.
Dual eligible
MedicaidSomeone who qualifies for both Medicare and Medicaid. Medicare pays first; Medicaid may fill gaps.
Employer match
RetirementMoney your employer adds to your retirement account based on how much you contribute. Often called "free money" because you only get it if you contribute.
FSA
InsuranceFlexible Spending Account. Pre-tax account for medical costs. Generally use-it-or-lose-it each year.
Gross pay
PaycheckYour total pay before any taxes or deductions are taken out.
HRA
InsuranceHealth Reimbursement Arrangement. Employer-funded account that reimburses certain medical expenses.
HSA
InsuranceHealth Savings Account. Tax-advantaged account paired with a high-deductible health plan. Money rolls over each year.
In-network
InsuranceProviders and facilities that have a contract with your insurance to provide care at negotiated rates.
Medicaid
MedicaidJoint federal/state program that helps with healthcare costs for people with limited income and resources.
Medicare Advantage
MedicarePart C — a private plan alternative for receiving Part A and Part B benefits. Often bundles Part D.
Medicare Part A
MedicareHospital insurance. Covers inpatient stays, some skilled nursing, hospice, and limited home health.
Medicare Part B
MedicareMedical insurance. Covers doctor visits, outpatient care, and preventive services.
Medigap
MedicareSupplemental insurance that helps pay costs Original Medicare leaves behind, like coinsurance and deductibles.
Net pay
PaycheckYour take-home pay after taxes, insurance, and retirement deductions.
Out-of-network
InsuranceProviders without a contract with your insurer. Usually costs more — sometimes a lot more.
Out-of-pocket maximum
InsuranceThe most you'll pay for covered services in a plan year. After this, insurance pays 100% of covered costs.
Part D
MedicarePrescription drug coverage offered through private plans.
Premium
InsuranceWhat you pay each month to have coverage, whether or not you use it.
Prior authorization
InsuranceApproval an insurer requires before they'll pay for certain medications, tests, or procedures.
Roth contribution
RetirementMoney you contribute after taxes. Qualified withdrawals in retirement are generally tax-free.
Skilled nursing facility
CareA facility that provides skilled medical care, like wound care or IV therapy. Medicare covers this only short-term, after a qualifying hospital stay.
Traditional contribution
RetirementMoney contributed pre-tax. Lowers your taxable income now; withdrawals in retirement are taxed.