After months of wrangling with the liable party's insurance company, or litigating a personal injury case in court, you finally make some headway and it seems you're going to get the payoff you've been working hard for. However, you may not want to celebrate just yet. Depending on the circumstances of your case, some of the money you're anticipating receiving may be snatched away by companies via liens. Here's what you need to know about this issue to help you prepare for this possibility.

Medical Insurance

If your health insurance provider paid for any part of your treatment for your injuries, it may place a lien on your settlement or court award to recover some or all of the money it put out for those expenses. This is because many insurance policies have subrogation clauses that allow the company to recoup the money it spent on you from the liable party. This means the insurance company can either "step in your shoes" and directly sue the individual that caused your injuries or it can essentially add itself to your lawsuit and take a cut of any money you recover from the defendant.

You can determine if you will be subjected to subrogation by reading your health insurance policy. Typically, there is no way to opt out of this clause, but state law regulates how insurance companies handle this issue. For instance, Texas caps an insurance company's recovery to either half the award minus attorney's fees or the total amount of the benefits paid, whichever is less.

If you live in a state that's not quite so restrictive, then you must make sure to account for a possible subrogation claim when asking for a court award or negotiating a settlement.

Government Benefit Programs

If you're receiving assistance from a government benefits program such as welfare, Medicaid, or unemployment, the government may require you to pay back the money you receive out of any financial award you get from the defendant. Typically, you are required to notify certain agencies (e.g. Department of Welfare) when you get income, and this includes telling them about a possible windfall from a personal injury lawsuit.

This is because many states have some type of reimbursement policy that lets the government recoup the money spent on the receiver's care. For instance, California requires custodial parents to repay welfare benefits they received once they start getting child support payments from non-custodial parents. Similarly to private insurance companies, Medicare and Medicaid also require policyholders to repay the cost of care they receive for injuries sustained in the accident.

However, there may be ways to get around reimbursement clauses, such as putting the money in a special trust. It's best to consult with an attorney about this issue to avoid inadvertently breaking the law in an effort to protect your court or settlement award.

Workers' Compensation

People who are involved in auto accidents while on the job can collect workers' compensation from their employer and sue the liable party for damages as long as the liable party is not the employer. For instance, a delivery driver who is hit by a drunk driver while out delivering pizzas can get money from workers' comp and the drunk driver for his or her injuries and losses.

However, workers' compensation is an insurance provider/policy. As such, it will typically have the same subrogation clause as other insurance policies that allow the agency to collect the amount of benefits paid to you from the defendant.

It should be noted, though, that workers' comp doesn't completely reimburse employees for all the damages they suffer. For example, workers' comp typically doesn't pay for property damage. So the amount you actually have to pay back may be significantly less than you think.

Third-party liens on your court or settlement award can be frustrating to deal with, but there may be things you can do to legally protect your money from them. Consult with a car accident lawyer or consider continue reading more for assistance with this issue.