Over the next two years Social Security Disability Income beneficiaries and those receiving other federal benefits including Social Security will receive their benefits checks by electronic means. The United States Department of Treasury will no longer issue paper Social Security checks and will issue benefits through its Go Direct program. Through Social Security’s Go Direct program, beneficiaries will receive their benefits either by direct deposit or on a prepaid debt card.
On May 1, 2011 any new participants in Social Security Disability Income, Social Security, Veteran Affairs or other federal benefits programs will need to choose an electronic payment method. Going forward paper checks will not be an option. Those who are current participants in federal benefit programs and receive paper checks will have until March 1, 2013 to adopt an electronic option.
Two electronic options are available: direct deposit and prepaid debit card. Folks who do not have a financial institution or prefer receiving their payments on a prepaid debit card will receive their benefits on a Direct Express Debit MasterCard card.
The catalysts for the transition to an electronic payment method were cost-savings and the millions of baby boomers who will begin retiring over the next five years. Eighteen million baby boomers are expected to reach retirement age in the next half decade. That translates into approximately 10,000 people per day becoming eligible for Social Security benefits.
It is estimated that taxpayers will save $1 billion over the next 10 years because of the move to electronic payment methods. Benefits issued by paper check cost 92 cents more than benefits issued by electronic means.
Source: U.S. Department of Treasury, “U.S. Treasury to “retire” paper check for new recipients of social security and other federal benefits, saving taxpayers $1 billion,” 4/26/11