Plain-English definitions
Money Glossary for Nurses and Healthcare Workers
The words you run into on a benefits form, a pay stub or a loan site, explained the way you’d explain them to a new grad on their first shift.
All the terms from our guides in one place, grouped by topic, with a link to the guide that goes deeper.
Saving and FIRE
- FIRE
Financial independence, retire early. It means having enough invested that work becomes a choice. You don’t have to quit: you can use it to cut back to part time, switch to a job you like more or stop picking up shifts.
- FIRE number
The amount you’d need invested to cover your spending for good. The common shortcut is 25 times what you spend in a year, so $60,000 a year of spending means a $1.5 million target.
- 4% rule
The idea behind the 25 times shortcut: take out 4% of your investments in the first year of retirement, then the same dollar amount raised with inflation each year after. It was tested on 30-year retirements. My take: if you’re retiring at 50 or earlier, treat 25 times as the minimum and consider 28 to 33 times, which means taking out about 3% to 3.6% a year.
- Savings rate
The share of your pay you invest, counting pre-tax 403(b) contributions and any match. It sets your timeline more than your income does: starting from zero, investing 10% takes about 51 years to reach financial independence, and 50% takes about 16, at a 5% return after inflation.
- Coast FIRE
The point where what you’ve already invested could grow to your full FIRE number by 65 without another dollar added. After that, your paycheck only has to cover your current life. For a $1.5 million target, it’s about $347,000 at 35.
- Today’s dollars, or “after inflation”
Amounts adjusted for inflation, so a future $1 million means what $1 million buys now. Our tables use a 5% return after inflation, which keeps every number in today’s dollars.
- Emergency fund
Cash for a car repair, a cut in hours or the wait before disability benefits start, kept in a high-yield savings account. Our guides suggest 3 to 6 months of essential expenses.
- Index fund
A fund that owns a small slice of a whole market, like every large US company, instead of a few picked stocks. Index funds tend to charge low fees.
- Target-date fund
One fund that holds a mix of stocks and bonds and shifts toward bonds as its target year (the year you plan to retire) gets closer.
- Expense ratio
A fund’s yearly fee, as a percent of what you have invested in it. A 0.05% expense ratio costs $5 a year per $10,000; a 1% fee costs $100.
- Taxable brokerage account
A regular investment account with no tax break and no limits. You can take money out any time, which makes it useful for retiring before 59½, the age when the 10% early-withdrawal penalty on most retirement accounts ends.
Retirement accounts
- 403(b)
The workplace retirement plan at public schools and 501(c)(3) nonprofits, including nonprofit hospitals. The 2026 limit for your own contributions is $24,500, the same as a 401(k).
- 401(k)
The usual workplace plan at for-profit employers, like hospital chains, staffing agencies and private practices. Same $24,500 limit in 2026. That limit is per person, shared across your 403(b), 401(k) and TSP contributions (a 457(b) has its own).
- 457(b)
A second workplace plan with its own $24,500 limit in 2026, on top of a 403(b). A government 457(b) (county, state or public university hospital) is held in trust for you. A nonprofit hospital’s 457(b) is offered only to managers and higher earners, stays the employer’s money until it’s paid out, can be reached by the employer’s creditors if it’s sued or goes bankrupt, and can’t be rolled into an IRA.
More: 457(b) rules
- TSP
The Thrift Savings Plan, the federal government’s version of a 401(k), for VA and other federal employees. Same $24,500 limit in 2026.
- Employer match
Money your employer adds to your plan when you contribute, like 50 cents per dollar up to 6% of pay. Contribute at least enough to get all of it.
- Vesting
When your employer’s contributions become yours to keep. Your own contributions are always yours, but a match can take a few years on the job to vest.
- Traditional vs Roth
Traditional (pre-tax) money skips income tax now and is taxed when you take it out. Roth money is taxed now, and qualified withdrawals later are tax-free. Your workplace plan may offer both.
- Roth IRA
An individual retirement account you open yourself, funded with after-tax money. The 2026 limit is $7,500, plus $1,100 at 50 and older. You can contribute directly if your MAGI (modified adjusted gross income) is under $153,000 single or $242,000 married filing jointly.
- Backdoor Roth
The way in for people whose income is too high for a direct Roth IRA: put after-tax money into a traditional IRA, then convert it to a Roth. Other pre-tax IRA money, including a SEP IRA, can make part of the conversion taxable.
- HSA
A health savings account, open only to people on an HSA-eligible high-deductible health plan (HDHP). Money goes in tax-free, grows tax-free and comes out tax-free for medical costs. The 2026 limits are $4,400 self-only and $8,750 family, plus $1,000 at 55 and older.
- Catch-up contributions
Extra room at older ages. In 2026: $8,000 more in a 403(b), 401(k) or government 457(b) at 50 and older, or $11,250 instead at 60 to 63. Some hospital 403(b)s also allow a 15-year catch-up of up to $3,000 a year for long-time employees. Starting in 2026, if your employer paid you over $150,000 in Social Security wages the year before, your catch-ups generally have to go in as Roth.
- Solo 401(k)
A 401(k) you set up for your own 1099 income when you have no employees other than a spouse. Your own contributions share the $24,500 limit with any 403(b) or 401(k), but not with a 457(b).
- SEP IRA
A Simplified Employee Pension IRA, a simpler retirement account for self-employment income. Easy to open, but because it counts as pre-tax IRA money, it can complicate a backdoor Roth.
- Pension
A plan that pays a set monthly income in retirement based on your years of service and pay, instead of an account balance you manage.
- Rule of 55
If you leave a job in the calendar year you turn 55 or later, that employer’s 403(b) or 401(k) can pay you without the 10% early-withdrawal penalty. It doesn’t apply to IRAs.
Pay and taxes
- W-2 vs 1099
W-2 means you’re an employee: tax is withheld and your employer pays half of Social Security and Medicare. 1099 means you’re paid as a contractor, like many PRN apps and locums jobs: nothing is withheld and you pay both halves yourself.
- PRN and per diem
Working as needed instead of on a set schedule. PRN comes from the Latin pro re nata, “as the need arises.” Some pay a higher hourly rate in exchange for fewer benefits.
- Shift differential
Extra hourly pay for nights, evenings, weekends or holidays, set by your employer or union contract.
- Tax bracket
The federal rate on your last dollars of taxable income. Extra-shift pay is taxed at your top bracket, which is why it keeps less than your average paycheck. In 2026, the 22% bracket covers taxable income from $50,400 to $105,700 for a single filer.
- Taxable income and the standard deduction
Taxable income is what’s left after deductions. Unless you itemize, you take the standard deduction: $16,100 single and $32,200 married filing jointly in 2026.
- MAGI
Modified adjusted gross income: your adjusted gross income with a few items added back. The IRS uses it to decide who can contribute directly to a Roth IRA and who gets some deductions.
- Social Security and Medicare tax (FICA)
FICA is short for the Federal Insurance Contributions Act, the law behind these payroll taxes. It’s 7.65% of W-2 pay: 6.2% for Social Security and 1.45% for Medicare. The Social Security part stops once your wages reach the wage base, $184,500 in 2026. An extra 0.9% Medicare tax applies above $200,000 single or $250,000 married filing jointly.
- Self-employment tax
Social Security and Medicare on 1099 income, where you pay both the employee and employer halves: 15.3% on 92.35% of your net earnings, with the Social Security part capped at the same wage base.
- Estimated tax
Quarterly payments to the IRS on income with nothing withheld, figured on Form 1040-ES.
- Exempt vs nonexempt
Under the federal overtime law (the Fair Labor Standards Act), nonexempt workers are owed time and a half past 40 hours a week. Registered nurses paid hourly are owed overtime. Salaried RNs paid at least $684 a week (the federal level as of October 2026) can be classified as exempt. Salaried PAs and pharmacists can be too if they meet the Labor Department’s professional tests. The department doesn’t name NPs; my reading is that, as RNs, the same rules apply.
- 8/80 schedule
A federal option for hospitals: overtime for hours over 8 in a day or 80 in a fixed 14-day period, instead of over 40 in a week. Employees have to agree to it before the work is done.
- Overtime deduction
A federal deduction for tax years 2025 through 2028. Only the “half” of time and a half that federal law requires counts, up to $12,500 a year ($25,000 married filing jointly), phasing out above $150,000 of MAGI ($300,000 joint). It doesn’t cover 1099 pay or overtime paid only because of state law or a union contract, and Social Security and Medicare still apply.
More: the overtime deduction
Student loans
As of October 20, 2026. Federal loan rules changed on July 1, 2026, and court cases are still moving.
- PSLF
Public Service Loan Forgiveness. It forgives what’s left on your federal Direct Loans after 120 qualifying payments while you work full time (an average of 30 hours a week, which can be combined across qualifying jobs) for a qualifying employer.
- Qualifying employer
For PSLF, a government employer at any level or a 501(c)(3) nonprofit, among a few others. For-profit hospitals don’t qualify. What counts is the employer on your W-2: a travel nurse employed by a for-profit agency works for the agency, even inside a nonprofit hospital.
- Income-driven repayment
Federal repayment plans that set your payment from your income and family size instead of your balance.
- RAP
The Repayment Assistance Plan, a new income-driven plan available since July 1, 2026. On-time RAP payments count toward PSLF’s 120 if you meet the other PSLF rules. Outside PSLF, any remaining balance is forgiven after 360 qualifying payments, or 30 years.
- Grad PLUS and the new loan caps
Grad PLUS loans ended for new borrowers on July 1, 2026, with an exception, for up to three academic years, for students enrolled on June 30, 2026 who had already borrowed for that program. New graduate borrowers are capped at $20,500 a year ($100,000 total), and professional students at $50,000 a year ($200,000 total). Pharmacy and dental programs count as professional. Under a court stay, the Department of Education is also treating MSN, DNP, nurse anesthesia (DNAP) and PA programs as professional for now; that could change after the court rules (final briefs are due December 4, 2026). There’s also a $257,500 lifetime cap.
- Loan repayment programs
Federal programs that pay part of your loans in exchange for working in a shortage area, like the Nurse Corps and National Health Service Corps programs.
Insurance
- Long-term disability insurance
Insurance that replaces part of your pay, commonly 60% in group plans, if illness or injury keeps you from working for months or years. Read five things in yours: the percentage, the monthly cap, the waiting period, how it defines disability and who pays the premium.
- Own occupation vs any occupation
Own occupation pays if you can’t do the regular duties of your own job. Any occupation pays only if you can’t do any job you’re reasonably suited for. Some group plans use own occupation for a set period, then switch to any occupation.
- Waiting period
Also called the elimination period: how long you have to be disabled before benefits start. Your emergency fund covers this gap.
- Term life insurance
Life insurance that covers a set number of years, like 20 or 30, and pays your beneficiaries if you die during that time. You need it mainly if someone depends on your paycheck.
FAQ
What does FIRE mean for nurses?
Having enough invested that you no longer need your paycheck, about 25 times what you spend in a year. For nurses, it can mean dropping to part time or PRN, or ending extra shifts, years before 65.
What’s the difference between a 403(b) and a 401(k)?
Mostly who offers it. Nonprofit hospitals and public universities offer 403(b)s, and for-profit employers offer 401(k)s. Both have the same $24,500 limit for your own contributions in 2026, and that limit is shared between them.
Is a 457(b) the same as a 403(b)?
No. A 457(b) has its own separate limit, so you can use both. But a nonprofit hospital’s 457(b) carries risks a 403(b) doesn’t: the money belongs to your employer until it’s paid out, and it can’t be rolled into an IRA.
Keep going
Sources (checked October 2026)
- 2026 limits: IRS Notice 2025-67 and IR-2025-111 (workplace plans, IRAs, catch-ups, Roth IRA income ranges); Rev. Proc. 2025-19 (HSAs). Brackets and standard deduction: Rev. Proc. 2025-32. Wage base: SSA 2026 fact sheet. Self-employment tax: IRS Topic 554.
- 457(b): IRS comparison of tax-exempt and governmental 457(b) plans. Rule of 55 and early withdrawals: IRS exceptions to the tax on early distributions.
- Overtime: DOL Fact Sheets #17N and #54; IRS fact sheet FS-2026-13 on the overtime deduction.
- Loans: 34 CFR 685.219 (PSLF); Department of Education RISE final rule fact sheet (caps, RAP); ED Electronic Announcement GENERAL-26-42 (interim professional degree list).
- Disability: group long-term disability replacement rates from Bureau of Labor Statistics data, as cited on our protect-your-income guide.
We’re an emergency physician and a registered nurse, not financial advisors, CPAs or attorneys. These definitions are simplified for education and leave out exceptions. Tax and loan rules change, so check the guide or the official source before you act.