WASHINGTON - Starting next year, the check will no longer be in the mail for millions of people who receive Social Security and other government benefits.
The federal government, which issues 73 million payments a month, is phasing out paper checks for all benefit programs, requiring people to get payments electronically, either through direct deposit or a debit card for those without a bank account.
The changes will affect people who get Social Security, veterans' benefits, railroad pensions and federal disability payments. Tax refunds are exempt, but the Internal Revenue Service encourages taxpayers to get refunds electronically by processing those refunds faster than paper checks.
About 90 percent of people who receive federal benefits already get their payments electronically, the Treasury Department says. New beneficiaries were required to get payments electronically starting last year, and, with a few exceptions, the rest will have to make the switch by March 2013.
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"It's just that natural progression of moving to how people are used to receiving their funds," said Walt Henderson, director of the Treasury Department's electronic funds transfer division.
Henderson said electronic payments are safer and more efficient than paper checks; in 2010, more than 540,000 federal benefit checks were reported lost or stolen. The switch will save the government about $120 million a year. Social Security will save $1 billion over the next decade, according to the Treasury Department.
"You think of that paper check floating out there in the delivery system, with personal information on it, it's much more susceptible to fraud versus an electronic payment," Henderson said.
Advocates for seniors say they understand the government's desire to cut costs and take advantage of technologies that most workers already use. The food-stamp program switched from paper coupons to debit cards in 2004.
But they have raised concerns about requiring the switch for older retirees who may not be used to electronic payments.
"This will affect some very frail elderly people who are living by themselves, many of them, and doing well, but usually within the context of that old paper check that they deposit in the bank," said Web Phillips, a senior policy adviser for the National Committee to Protect Social Security and Medicare.
The switch is mandated by a Treasury rule issued in December 2010.
"The change has to be handled carefully and with a lot of sensitivity so that there aren't people who lose track of a payment or don't understand that they have a card that came in the mail that's the source of their payment," Phillips said. "That's our concern."
Details of switch to paperless payments
How the changes in delivering Social Security and other government benefits will work:
• Starting last year, new beneficiaries were required to electronically receive Social Security, veterans' benefits, railroad pensions and federal disability payments.
• By March 1, 2013, nearly everyone will be required to receive their payments electronically, mainly through direct deposit into a bank account.
• Those without bank accounts will be issued a Direct Express debit card, which will receive payments and can be used for purchases at retail stores and for cash withdrawals at ATMs.
• There will be no fees for debit card purchases, but there will be fees for some ATM transactions.
• Beneficiaries who are age 90 or older won't be required to make the change. Others can apply for a hardship waiver, but they will be granted only in "extreme, rare circumstances."
• The federal government issues 73 million benefit payments a month. About 90 percent of the payments already are done electronically, so about 7 million people will have to make the switch.
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