Next Year, All Federal Benefits Will Be Paid Electronically

On March 1, 2013, the phrase "the check is in the mail" will no longer apply to recipients of Social Security Disability or other government benefits. By that date, all recipients of those benefits will have their payments delivered electronically, either through direct deposit into a bank account or in the form of a debit card, instead of a paper check.

The federal government has two primary reasons for making the switch from mailed Social Security disability benefit checks to electronic payments. First, there is more safety and efficiency in electronic payments. Benefits checks get lost or stolen quite frequently. Over 540,000 lost or stolen checks were reported in 2010. Electronic payments significantly reduce the potential for fraud or theft of personal information.

The second reason is that sending benefits payments electronically will save the federal government roughly $120 million every year. According to the United States Treasury Department, the switch will result in a savings of $1 billion for Social Security over the next 10 years.

In general, the switch from mailing paper checks to sending payments electronically should not make too many waves throughout the system. The federal government started the process of switching from checks to electronic payments last year when it began requiring new benefits enrollees to get their benefits payments electronically. Approximately 90 percent of all recipients of federal benefits get their payments delivered electronically already.

The people who would likely be most affected by the changeover are elderly benefits recipients who are unfamiliar with electronic payments or debit cards, or who do not have bank accounts. Therefore, people aged 90 or older are exempt from the change and can continue to receive paper checks. Others have the option of applying for a hardship waiver to keep receiving checks, but according to the Treasury Department, those will only be granted in "extreme, rare circumstances."

Source: Bloomberg Businessweek, "Don't wait for Social Security check in the mail," Stephen Ohlemacher, Apr. 15, 2012.

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