Many people use the word karma to speak about something that has happened or that someone did something bad to another person. They may say that it is their karma, meaning that they did something similar to someone in this life or in a previous incarnation so now they are getting it back. As you sow so shall you reap is the expression. When there is a physical problem or health issue they may say this is the karma of the body that it has to go through this problematic state to cleanse itself from one's past actions.
When you realize the Self it is said that you are free from all karma. This does not mean that things don't happen to the body and that the body doesn't go back to earth. But it means that You, the Pure Being or Self, never becomes ill or dies as who you are is the consciousness pure and not just the body and mind. That true beingness can never change. As it says in the Bhagavad Gita, it can't be cut by weapons, burnt by fire, wet by water, or dried by the wind. It is indestructible and you must know this!