Digitization is once again afoot and this time, beneficiaries of the Social Security program will have to say goodbye to paper checks come September 30th. The decision to phase out the use or disbursement of paper checks at the Social Security Administration (SSA) has been made in accordance with the March 25th executive order titled “Modernizing Payments To and From America’s Bank Account” as issued by the White House.
When considering the significantly higher rates of efficiency that come with electronic banking systems as compared to the steps one would need to take to actually have access to the money from a mailed check, this broader federal initiative comes as no major surprise. With regards to impact on Social Security beneficiaries, there are currently less than one percent of benefit recipients who receive mailed paper checks according to the SSA’s count.
If you are a beneficiary of the Social Security program who still receives mailed paper checks, here is everything you need to know.
Modernizing payments in the broader federal government
In a statement made in August, Treasury Secretary Scott Bessent stated that, “reducing paper checks has been a longstanding bipartisan goal that our administration is finally putting into action. Thanks to President Trump, this will help reduce fraud and theft. It will also remove delays that prevent hardworking Americans from receiving their vital payments.”
According to the SSA’s monthly statistical snapshot for July, there are around 74 million beneficiaries in the program, 99% of whom have already opted to receive their monthly benefits by direct deposit. However, the less than one percent of paper check recipients still amounts to hundreds of thousands of vulnerable individuals. These individuals will need to either switch their payment method to one of the two available electronic payment methods or apply for a waiver before September 30th so as to prevent any delays with their benefit payments.
According to the executive order, the use of paper based payments “imposes unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies.” It further notes that, “historically, Department of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered than an electronic funds transfer (EFT).”
In the SSA update, the agency also cites cost saving as on of its reasons for shifting towards electronic payment methods. Citing the Department of Treasury, the SSA explains that, “issuing a paper check costs about 50 cents, whereas an EFT costs less than 15 cents. This shift could save the federal government millions of dollars annually.”
What should beneficiaries do?
The SSA currently offers two electronic payment options: Direct Deposit, or a Direct Express Card, which is “for people without a bank account, the Direct Express card is a prepaid debit card designed specifically for federal benefit payments.”
As such, if you are a Social Security beneficiary who still receives paper checks but is able to switch over your payment method, you can take any one of the following steps:
- Call in to the Social Security Administration at 1-800-772-1213.
- Update your payment method online at www.ssa.gov.
- Have your local bank or credit union update the payment method by providing the necessary account information.
- Enroll in the Direct Express card by calling 1-800-333-1795.
Alternatively, if you are unable to switch over your payment method due to a lack of access to the required infrastructure or for any other reason where the use of electronic payments will be deemed unfeasible, an exception will be made according to the executive order. The SSA Commissioner Frank Bisignano also recently shared confirmation to Sen. Elizabeth Warren that the agency is backtracking on its initial announcement and as a result, it will continue to disburse paper checks to those who require it.