Detailed Answer — How settlement funds are delivered and what to expect
This guide explains the common routes settlement money takes after an insurer issues payment in Kentucky, who signs or receives the check, and the steps you or your lawyer must follow before you actually get usable cash. This is a practical, plain-language overview for someone with no legal background.
Key factors that determine how you receive funds
- Whether you were represented by an attorney when the settlement was reached.
- Who the insurer made the check payable to (you alone, you and your lawyer, or multiple payees such as a medical provider).
- Any outstanding liens, subrogation, or government interests (for example, Medicare or Medicaid conditional payments).
- Any required paperwork the insurer or payee (like a doctor or hospital) wants in exchange for release of funds.
- How the insurer sends funds: by mailed check, courier, bank wire, or electronic transfer.
If you had an attorney
The most common situation is that an attorney handles the settlement check. Typical steps:
- The insurer issues a settlement draft that is often payable to both you and your attorney (for example, “Jane Doe and John Smith, Esq.”).
- Your attorney asks you to sign a release and other settlement documents. The attorney may also request a signed settlement allocation or lien confirmation forms so they can clear any outstanding medical or other liens.
- When the attorney receives the check, most firms promptly deposit client funds into a lawyer trust account (often called an IOLTA or similar escrow account) until all conditions are met and the check clears. Placing funds in trust protects client money and lets the attorney track deductions (fees, costs, and liens).
- Once the check clears and all liens, bills, and agreed fees are paid, the attorney sends you a written accounting and your net proceeds. This distribution usually happens by check or electronic transfer depending on the firm’s procedures. Expect a short bank-clearing hold before funds are available.
If you were not represented
If you negotiated the settlement yourself and the insurer mailed the check directly to you, you should:
- Confirm the payee name on the check and do not sign or alter a check until you understand whether other parties (medical providers, lien holders) need to endorse it.
- If a provider or lienholder expects payment, the insurer might issue a joint check payable to both you and the provider, or it may issue separate checks. Joint checks require endorsement by all named payees.
- Be careful: signing a joint check without sorting out lien obligations can leave you personally responsible if a creditor says it never received payment. Get written confirmation that liens are satisfied where possible.
Common payment methods and what they mean for you
- Mailed paper check: The payee(s) must endorse the check. If multiple endorsements are required, coordinate carefully so funds are not delayed.
- Cashier’s check or bank draft: Often used when parties want guaranteed funds. Still confirm payee names and lien obligations.
- Electronic funds transfer (EFT/wire): Faster availability. Confirm the receiving account and that the routing instructions go to the correct trust or client account.
- Joint check to claimant and medical provider: These require agreement on distribution. Get written confirmation that the provider will accept the check as full satisfaction of its claim, or obtain a lien waiver before distribution.
Liens, subrogation, and government interests (what can reduce your check)
Before you receive net proceeds you usually expect, the following can reduce the total:
- Medical provider liens or hospital bills that seek payment from settlement proceeds.
- Health insurer subrogation claims seeking repayment of medical payments the insurer covered.
- Medicare or Medicaid conditional payments and recovery claims. If Medicare provided benefits related to your injury, federal law requires reporting the settlement and resolving conditional payment obligations. See CMS guidance on conditional payments: https://www.cms.gov/medicare/coordination-benefits-recovery/coordination-of-benefits-and-recovery/conditional-payments
Timing — how long until you get usable money?
Timing depends on:
- How quickly the insurer cuts the check after you finalize the release.
- Bank clearing times (paper checks may have holds of a few business days).
- How long it takes to resolve liens and outstanding bills.
- Whether the check required multiple endorsements or the creation of separate payments to lienholders.
Practical checklist before you accept and cash a settlement check
- Confirm who the insurer names as payee and whether co-payees (attorney, provider) appear on the check.
- Demand a full written accounting from your attorney showing fees, costs, and lien payments before distribution.
- Do not sign a release until you understand how lien claims and subrogation will be handled.
- If Medicare/Medicaid might have paid benefits, notify Medicare early and confirm the process to resolve conditional payments.
- Keep copies of the settlement check, the cleared check image, the deposit slip, and every distribution document.
When problems arise
Common issues include delays in distribution, disputes about lien amounts, and checks issued to the wrong payees. If you see an unexpected deduction or you did not receive an accounting, ask the attorney or insurer for written explanations. If you cannot resolve the issue, you can contact the Kentucky Bar Association for lawyer-discipline guidance or consider consulting another lawyer for a second opinion.
Disclaimer
This post is educational only and not legal advice. It explains common practices in Kentucky but does not replace advice from a licensed attorney who knows the full facts of your case. If you need legal advice about receiving settlement funds, contact a Kentucky-licensed attorney.
Helpful Hints
- Ask your lawyer for a written timeline: when the check will be issued, when it will be deposited, and when you will receive your net funds.
- Request a final itemized accounting of all fees, costs, and payments to third parties before the distribution.
- Do not sign blank endorsements or give a signed blank release to anyone.
- If a hospital or insurer says it has a lien, ask for a written lien statement showing how the lien was calculated.
- If you see Medicare listed as a potential payer, contact CMS early; resolving conditional payments can materially affect your net recovery. See: https://www.cms.gov/medicare/coordination-benefits-recovery/coordination-of-benefits-and-recovery/conditional-payments
- Keep paper and digital copies of everything: checks, releases, deposit slips, and communications about how funds will be split.
- If a check is payable to you and a provider, get a written agreement before endorsing the check that shows how much the provider will accept.
- Consider electronic payment options if you want faster access, but verify routing information carefully to avoid fraud.