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Received Social Security? You Need Bank Account or Debit Card

There are slightly less than 5 million paper checks mailed every month to those receiving Social Security benefits. In order to mail those those checks, it adds an additional $4.6 million every month according to the Treasury Department. Now, though, things are about to change – and recipients have just shy of two months to make the transition if they’ve not already done so.

March 1

Millions of Americans will receive their payments, beginning March 1, via electronic payment methods. The traditional hard copy of a check will no longer be mailed. This isn’t necessarily anything new, though. For close to two years, the government has been encouraging recipients to have their monthly benefits moved to a direct deposit method of transferring funds either to a traditional checking account or a prepaid debit card. It’s been a slow dance, but now, the transition is nearly complete and those unprepared will find themselves without their monthly payments.

In fact, the federal government has been pushing its prepaid “Direct Express” debit cards, which have been offered since May 2011. Since that campaign has begun, the Treasury Department has required all newly added recipients of payments from any of the many federal benefits programs, including Social Security, Supplemental Security Income disability, Veterans Affairs and government pension plans, to enroll in some kind of electronic payment dynamic. For those already in the system, they were extended a deadline of March 1, 2013.

Safer and Easier

Indeed, it’s safer and faster for recipients to get access to their money. This eliminates a myriad of risks, including the check getting lost in the mail or being stolen. Already, 93% of government payments are in an electronic deposit mode; still, there are not quite 5 million Americans who still receive the paper checks. It costs the government (read: the taxpayer) 92 cents more to mail each and every check than it is to go the direct deposit route. The government agency drove the importance of this transition home with one simple fact:

If it did not push for the switch to electronic transfers it would cost taxpayers another $1 billion over the next 10 years. And in these tough economic times, any savings goes a long way.

Clearly, the benefits are many. To make the transition as seamless and pain free as possible, the government has partnered with close to 2000 local, regional and national banks, credit unions, community groups and social service agencies in an effort to get the word out about how quickly the deadline is approaching. Public service announcements are being slated for later this month, too. Of course, the changes courtesy of the fiscal cliff is complicating matters, but the agency insists the transition should be an easy one as it’s been prepared for quite some time.

Options

So what happens if someone doesn’t want to go electronic? According to Walt Henderson, who is a Treasury Department official, they will still receive paper checks, but they will also be “the target of more aggressive communication efforts, such as additional mailings”. He stressed that the payments won’t be interrupted, but that more personal and direct efforts will be made in order to convince the that the new process is faster and safer. Interestingly enough, states like California, Texas and New York still have the largest number of residents who have yet to convert to electronic payments. In fact, between the three states, there are more than 1 million people receiving monthly Social Security and disability checks as of November 2012.

Here are a few more facts that should convince recipients:
Henderson said that in 2011 alone, close to 450,000 Social Security checks were never received by those whom they were addressed to. They were either stolen or lost. There was $70 million in paper checks that were fraudulently endorsed, too. Clearly the new methods are far better and certainly more beneficial to those who rely on these monthly funds. That said, they’re not perfect and not without their concerns.

Congressional Testimony

In testimony to Congress this past September, the inspector general of the Social Security Administration Patrick O’Carroll, testified that identity thieves had successfully rerouted some payments to the wrong accounts using stolen social security numbers. There are other “hot spots” too that thieves use. Still, and despite the problems, electronic payment transfers continue to be the safest and strongest choice as far as recipients are concerned. The government is also issuing different tips and precautions. For instance, no government representative will ever contact you asking for personal information. No information should be given to anyone over the phone and in fact, any calls should be reported to the consumer’s local Social Security Administration Office. For those who have been targeted, they should report suspicious activity to the Social Security Fraud Hotline at 1-800-269-0271.

For those wondering where they can make changes, the spokesperson is directing them to visit www.GoDirect.org or they may call a toll-free helpline at 1-800-333-1795. Also, speaking with their bank representative can also help ease minds and provide answers for those with questions. It’s a painless process and once it’s done, it’s not something that has to be repeated.

And finally, in a bit of good news, the Treasury Department announced monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 62 million Americans will increase 1.7 percent this year. This adjustment will show up in the coming weeks and for more than 8 million SSI beneficiaries, they saw a cost of living adjustment (COLA) on their prepaid debit cards or their bank accounts in December.

Plus, the government site has also been revamped recently. It’s now easier to navigate and there are many resources included now for the first time, including options for applying for benefits and a cloud that allows you to see what you’ve already submitted. Visitors can also complete the forms to have their paychecks electronically rerouted to their debit card or bank account.

So what do you think about this new streamlined approach? Are you comfortable with electronic payment transfers? Let us know your thoughts about this latest government undertaking.

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