It has now been almost a month since the executive order to “modernize America’s bank account” has gone into effect. The executive order stipulates that all payments made to and from the federal government be done electronically — with the main goal of the executive order being an end to the use of paper based payments.
All payment methods had to be switched to an electronic payment method by September 30th, but does that mean that Social Security checks will no longer be mailed to recipients? The answer is both yes and no. Here is what you need to know.
Why switch to electronic payments?
Opting to digitize payments this way does not come as much of a surprise, particularly not in this day and age. The SSA wrote in its July 14th update outlining the change that, “by moving to electronic payments exclusively, we aim to improve efficiency, security, and ensure beneficiaries receive their monthly benefits promptly.”
The March 25th executive order titled “Modernizing Payments To and From America’s Bank Account” cites a similar rationale for the decision to phase out the use of paper based payments from the federal government. By switching over to electronic payment methods, costs will be cut down significantly as well.
According to the executive order, “maintaining the physical infrastructure and specialized technology for digitizing paper records cost the American taxpayer over $657 million in Fiscal Year 2024 alone.” Citing the U.S. Department of Treasury, the SSA also notes that, “issuing a paper check costs about 50 cents, whereas an EFT costs less than 15 cents,” adding that “this shift could save the federal government millions of dollars annually.”
As such, the SSA had since been encouraging all of its beneficiaries who receive mailed paper checks to switch over their payment method to one of the two available electronic options. Over 99% of Social Security beneficiaries had already been receiving their benefits electronically, with the remaining less than one percent of beneficiaries amounting to around half a million individuals.
These individuals were encouraged to switch their payment methods over to a Direct Deposit before the September 30th deadline. If the beneficiary did not have a bank account, they could enroll in a Direct Express Card which functions similarly to a debit card but for benefits.
Will exceptions be made?
Whilst efficiency and enhanced security are the driving forces behind the decision to phase out paper based payments, advocates fear this change may put vulnerable individuals at a disadvantage due to a lack of access to digital services.
“A lot of claimants move around and don’t always get their mail,” noted Jennifer Burdick, a divisional supervising attorney in the SSI Unit at Community Legal Services in Philadelphia. “And the folks that I represent who get paper checks mostly learned from me about this transition.”
Additionally, Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities, also explains that “the people most affected by this change tend to be the most vulnerable, often unbanked or unhoused, and lacking in the tools and skills they need to access digital services.”
Whilst the SSA has been actively encouraging its beneficiaries to transition their payments, the agency has stated that exceptions will be made if necessary. A September 19th reminder of the approaching deadline also noted the following: “temporary checks are no longer available for initial claims and anyone seeking an exemption must file a waiver with the U.S. Treasury by calling 1-877-874-6347. 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.”
“This is a population that can’t afford to miss a payment, so it’s very important that the Trump administration manage the transition without interrupting their benefits,” Romig added.