By March 2013, Social Security will cease issuing paper checks to recipients. Individuals who receive Social Security, veterans’ benefits, railroad pensions and disability payments will be required to receive their monthly benefits either by direct deposit or on a debit card.
For most individuals, this change will go unnoticed since the majority of individuals already receive their benefits by direct deposit. Currently, all new beneficiaries are required to receive their funds electronically or by debit card. The people most likely to be affected by this change are the elderly, older retirees, and individuals who are unfamiliar with electronic payments.
One of the motivating reasons for this transition is to combat fraud. Over 500,000 paper checks were lost or stolen in 2010; an expensive penalty for mailing benefit checks. Now, the government claims it will save over $1 billion over the next decade with this change.
The concern by senior advocates is that individuals who are used to receiving paper checks will not understand that the card they receive in the mail is their benefit amount or that their funds appear automatically in their bank account. There are very limited exceptions to this rule change: (1) person 90 years and older will not be required to make the switch, and (2) if an individual can show that a debit card would impose a hardship, which the government claims would be an extreme circumstance.
This transition does not come without some strings attached, however. The debit cards are issued by Comerica Bank, the Treasury Department’s financial agent and individuals may make purchases anywhere MasterCard debit cards are accepted. Debit card holders may also make one ATM withdrawal each time a payment is made to the card. Any additional withdrawals will cost $0.90. All withdrawals may be subject to fees charged by the owner of the ATM. For individuals not used to using ATMs or debit cards, these fees may be a surprise. In the case of a lost or stolen card, if the beneficiary reports the card missing promptly, they will be protected from any unauthorized purchases.
In order to help educate the public regarding this change, visit www.GoDirect.org or call toll-free, 1-800-333-1795.
Attorney Jennifer J. Allen is an associate attorney with Alan C. Olson & Associates, S.C. If you have any questions about Social Security Disability, please contact her at [email protected].