As the end of September approaches, the Social Security Administration (SSA) will likely be in the process of preparing to switch over its payments from paper checks to electronic payment methods. In terms of numbers, the change will impact less than one percent of the total beneficiaries in the program. However, when considering the fact that there are currently some 74 million beneficiaries in the Social Security program, less than one percent of this total still amounts to hundreds of thousands of individuals.
The SSA’s decision to no longer issue paper checks to beneficiaries has come about in accordance with an executive order aimed at modernizing all payments to and from the broader federal government. The order was issued by the White House on March 25th and is slated to go into full effect as of September 30th, which is just about a week away.
Since its July 14th blog post announcing the change, the SSA has been actively encouraging all paper check recipients to switch over their payment method to one of the two available electronic payment forms. Here is everything you need to know.
Modernizing the federal space
Electronic payment forms have steadily been growing into the preferred method of transacting worldwide for some years now, which makes this executive order come as no big surprise. As such, the executive order had been issued with the aim of promoting “operational efficiency”, as well as to reduce costs, and eliminate the potential for mail theft, which is said to have “increased substantially since the COVID-19 pandemic.”
The SSA’s announcement of the change reiterated a similar rationale, mentioning 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.” The executive order also notes that “maintaining the physical infrastructure and specialized technology for digitizing paper records cost the American taxpayer over $657 million in Fiscal Year 2024 alone.”
This change is slated to go into effect as of September 30th, and as such, beneficiaries who receive paper checks from the SSA now have just about a week to ensure that they have changed over their payment method from a mailed paper check to a Direct Deposit. Alternatively, if the beneficiary does not have a bank account, they should enroll in a Direct Express Card, which is “a prepaid debit card designed specifically for federal benefit payments.”
Once the beneficiary has set up a direct deposit or enrolled in a Direct Express Card, they should also update their payment information with the SSA. This can be done online through the my Social Security portal.
SSA confirms exceptions will be made
While over 99% of Social Security recipients already receive their monthly benefits electronically through direct deposit, concerns were raised that the remaining approximately 500,000 individuals who receive paper checks might not all be in a position to transition their payment methods. Electronic payments could be deemed unfeasible for many due to a number of factors, including, advanced age or a lack of access to the infrastructure required for electronic banking.
Subsequently in July, Sen. Elizabeth Warren secured key comments from SSA Commissioner Frank Bisignano during a private meeting. At this meeting, “Commissioner Bisignano committed not to entirely remove the option for beneficiaries to receive paper checks, backtracking on the agency’s own recent announcement to “stop issuing” them,” as per Sen. Warren’s press release.
The executive order also stipulates that exceptions will be made in cases where an electronic payment would be deemed unfeasible. According to the U.S. Department of Treasury, a waiver will be granted in the following circumstances:
- The check recipient is an individual to whom electronic payments would impose a hardship due to a mental impairment.
- The check recipient lives in a remote geographic location lacking the infrastructure to support electronic financial transactions.
- The check recipient is age 90 or above.