Top 25 Accounting-Related Legal and Medical Terms Homeowners Should Know
When dealing with legal and medical issues, especially those that involve significant financial considerations, homeowners may encounter various accounting-related terms. Understanding these terms is pretty important for effectively managing costs, navigating insurance claims, and ensuring that you comply with legal and medical requirements. Though some of these terms are mentioned elsewhere, we decided to pull all of these together in one place for easy reference.
In short, this guide will walk you through the top accounting-related legal and medical terms that you should be familiar with.
1. Retainer
A Retainer is an upfront fee paid to a lawyer or medical professional to secure their services. This fee is typically held in a special account and is used to pay for ongoing services as they are provided. Retainers are common in legal cases where ongoing consultation or representation is required.
2. Contingency Fee
A Contingency Fee is a payment arrangement where a lawyer’s fee is contingent upon winning the case. The lawyer receives a percentage of the Settlement or judgment, rather than charging an hourly rate. This is common in personal injury cases and can affect how settlement funds are distributed.
3. Invoice
An Invoice is a detailed bill issued by a service provider, such as a lawyer or medical professional, listing the services rendered and the total amount due. In legal and medical contexts, invoices are crucial for documenting expenses and ensuring that all services are properly accounted for.
4. Billable Hours
Billable Hours refer to the time a lawyer or other professional spends working on a client’s case, which is billed to the client at an agreed-upon hourly rate. Understanding billable hours is important for managing costs in legal and medical matters.
5. Lien
A Lien is a legal Claim against property or funds, often placed by a medical provider or attorney to ensure payment for services rendered. For example, if you receive a settlement in a personal injury case, a medical provider might place a lien on those funds to recover unpaid medical bills.
6. Settlement
A Settlement is an agreement between parties in a legal dispute to resolve the matter without going to trial. The settlement amount is usually negotiated and agreed upon by both parties and can involve payments for damages, medical expenses, and legal fees.
7. Damages
Damages refer to the monetary compensation awarded to a plaintiff in a lawsuit for losses or injuries sustained. Damages can be compensatory (covering actual losses like medical bills) or punitive (intended to punish the defendant). Understanding damages is essential for managing financial outcomes in legal cases.
8. Deductible
The Deductible is the amount you must pay out of pocket before your insurance coverage begins to pay. This term is commonly used in medical insurance policies and can significantly impact your out-of-pocket costs for medical services.
9. Co-Payment
A Co-Payment (or Co-Pay) is a fixed amount you pay for a covered medical service, usually at the time of the service. Co-pays are common in health insurance plans and are a key part of managing healthcare costs.
10. Coinsurance
Coinsurance refers to the percentage of medical costs that you are required to pay after you’ve met your deductible. For example, if your coinsurance is 20%, you would pay 20% of the medical costs, and your insurance would cover the remaining 80%.
11. Out-of-Pocket Maximum
The Out-of-Pocket Maximum is the most you’ll have to pay for covered medical services in a Policy Period, usually a year. Once you reach this limit, your insurance covers 100% of eligible expenses. Knowing your out-of-pocket maximum helps you plan for potential medical expenses.
12. Retrospective Review
A Retrospective Review is an evaluation of medical services after they have been provided, to determine if the care was necessary and if the charges were appropriate. This review can affect the reimbursement you receive from insurance.
13. Medicare Set-Aside (MSA)
A Medicare Set-Aside (MSA) is an amount of money set aside in a settlement to cover future medical expenses that would otherwise be paid by Medicare. MSAs are typically used in workers’ compensation and liability settlements.
14. Subrogation
Subrogation is the process by which an insurance company seeks reimbursement from a third party responsible for a loss after the insurer has paid out the claim. In legal cases, subrogation can affect how settlement funds are distributed, particularly if your insurance company covers your expenses initially.
15. Power of Attorney (POA)
A Power of Attorney (POA) is a legal document that gives someone else the authority to act on your behalf in financial, legal, or medical matters. POAs are often used when the Principal (the person granting the power) is unable to manage their affairs due to illness or disability.
16. Health Savings Account (HSA)
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals with high-deductible health plans save for medical expenses. Contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free.
17. Trust
A Trust is a legal arrangement in which one party (the Trustee) holds and manages Assets for the benefit of another (the Beneficiary). Trusts can be used to manage Personal Property, distribute assets, and protect them from creditors or legal claims.
18. Escrow Account
An Escrow Account is a temporary account held by a third party, often used to manage funds during a transaction, such as a home sale or legal settlement. In legal and medical contexts, escrow accounts may be used to hold settlement funds until all claims are resolved.
19. Structured Settlement
A Structured Settlement is a financial arrangement in which a plaintiff receives periodic payments instead of a lump sum after settling a lawsuit. Structured settlements are commonly used in personal injury cases to provide long-term financial security.
20. Medical Lien
A Medical Lien is a legal claim placed on a settlement or judgment to ensure that a healthcare provider is paid for medical services rendered. If you receive a settlement, the lien ensures that your medical bills are paid before you receive any remaining funds.
21. Tax Deduction
A Tax Deduction is an Expense that can be subtracted from your taxable income, reducing the amount of tax you owe. Legal fees and medical expenses may be deductible in certain circumstances, so understanding these deductions can help you manage your tax liability.
22. Taxable Income
Taxable Income is the portion of your income that is subject to taxation. It includes wages, dividends, and Capital Gains, minus any deductions or exemptions. Legal settlements and awards can sometimes be considered taxable income, depending on the nature of the claim.
23. Garnishment
Garnishment is a legal process in which a creditor or other party obtains a court order to seize a portion of your wages or assets to satisfy a debt. Garnishments can be applied to settlement funds, so it’s important to understand how they might affect your finances in a legal dispute.
24. Assignment of Benefits (AOB)
An Assignment of Benefits (AOB) is a legal agreement that allows a healthcare provider to receive payment directly from your insurance company for covered services. This arrangement simplifies the payment process but also requires careful management to ensure that all claims are properly handled.
25. Pre-Authorization
Pre-Authorization is the approval required from your insurance company before certain medical services are provided. Failure to obtain pre-authorization can result in denial of coverage, leading to higher out-of-pocket costs.
Wrap-Up
Understanding these 25 accounting-related legal and medical terms is essential for homeowners navigating complex situations that involve both legal and financial considerations. Whether you’re dealing with a lawsuit, managing healthcare expenses, or preparing for potential financial outcomes, familiarity with these terms will help you make informed decisions and manage your obligations effectively.
If you have any questions about how these terms apply to your specific situation, we can probably help, or consider consulting with a lawyer, accountant, or financial advisor.