A major change that will impact hundreds of thousands of Social Security beneficiaries is at our doorstep. On March 25th, the White House issued an executive order stating that all payments made to and from what is considered as America’s bank account are to be made electronically as of September 30th. In the executive order, points such as increased efficiency and a rise in mail theft complaints are cited are the reasoning behind the decision to make such a major change.
Electronic banking has steadily been growing into the preferred method of banking for several years now, with many retailers and restaurants going completely cashless. As such, this change comes as no surprise, and is actually something that the Department of Treasury has been transitioning towards for years now. In 2010, the Department of Treasury issued a final rule aimed at the gradual elimination of paper checks for federal benefit disbursements.
Subsequently, a July 14th update from the Social Security Administration (SSA) confirmed that the agency will no longer be issuing paper checks to beneficiaries as of September 30th. According to SSA data, over 99% of recipients already receive their benefits electronically via direct deposit. The less than one percent of beneficiaries who receive paper checks does still amount to at least half a million individuals, however. Here is what you need to know.
Deadline to end paper checks is here
On Friday September 19th, the SSA updated its blog with a reminder for beneficiaries that the deadline to switch payment methods is fast approaching, and as such, paper check recipients should act fast so as “to avoid any disruption in payments.”
“Electronic payments are faster, more secure, and more convenient. Funds are deposited directly into a bank account or onto a prepaid debit card, eliminating mail delays and trips to the bank,” the agency wrote.
Since the SSA’s initial announcement of this transition to electronic payments, the agency has been proactively encouraging all paper check recipients to make the switch. In pursuit of this, the agency has been including inserts explaining the change and how to go about updating one’s payment information along with the checks it mails out.
Before September 30th hits, paper check recipients will be required to change their payment methods to one of the two following options, as per the SSA’s reminder:
- Direct Deposit: Social Security beneficiaries can manage direct deposit through their personal my Social Security account. Supplemental Security Income recipients and international beneficiaries can call 1-800-772-1213 for help.
- Direct Express® Card: For those without a bank account, enroll by calling 1-800-333-1795 or visiting www.usdirectexpress.com.
Exceptions
According to both the executive order and the SSA’s initial announcement, phasing out the use of paper based payments will not only increase efficiency, but will also save the federal government millions of dollars annually. According to the U.S. Department of the Treasury, “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.”
While the rationale for this digital mandate makes perfect sense, navigating this transition may not be feasible for some of the more vulnerable beneficiaries in the program. Beneficiaries who are, for instance, of an extremely advanced age, or those who do not have access to the infrastructure required for electronic banking, will likely still need to receive paper checks.
In such cases, the agency has stated the following: “If you have no other way to receive payments, we will continue to issue paper checks. There are no plans to pause any payments starting October 1.” Additionally, in July, SSA Commissioner Frank Bisignano also shared confirmation that the agency will continue to disburse paper checks to those who require it.