Social Security will soon end paper checks

A small group of recipients remains eligible for checks, and a consumer group is urging the Treasury to allow more waivers.

By MSN Money Partner Aug 16, 2012 3:49PM

This post comes from Philip Moeller at partner site U.S. News & World Report.


U.S. News & World Report on MSN MoneyThe movement to direct deposit of Social Security benefits is nearly complete. More than 52 million beneficiaries receive their payments electronically, and about 3.3 million -- only 6% -- are still paid with paper checks. Disability recipients of Supplemental Security Income payments are less likely to have made the switch. Nearly 1.5 million SSI recipients, or more than 17%, are still getting paper checks as of this month.


Image: Social Security Card (© Comstock)By next March, U.S. Treasury Department rules will require most people to have switched to electronic payments. Under its Go Direct program, people can have federal benefit payments deposited directly into their bank or credit union account or put into a Direct Express Debit MasterCard card account. Paper checks will continue for a limited number of hardship cases and people in their 90s, but the number of allowable waivers will dwindle over time.


Direct deposit is a good deal for nearly everyone. Gone are the fears of stolen checks, the demands of taking the check somewhere to be cashed or deposited, and just the general uncertainty of wondering if something has happened or will happen to your check.


It's also a good deal for the government, which saves hundreds of millions of dollars in expenses with electronic deposits. (Post continues below.)

If you're a recipient or a family member, make sure you understand the rules for the use and fees surrounding direct deposit accounts for your Social Security benefits. And if you ever think something is wrong with how your benefit payments are being handled, call the agency's national number -- (800) 772-1213) -- or visit your local Social Security office.


The spectrum of reasons for third-party control of a recipient's Social Security payments includes many practical needs. A nursing home, for example, may be caring for someone with dementia and that person's payments are used to fund their residency and care. Or a disabled recipient may authorize a financial institution or perhaps a family member to manage their Social Security payments. The agency deals with many such requests. Treasury rules on direct deposits include special recognition of nursing homes and religious orders.


However, the fair treatment of recipients can get much murkier. Many financial institutions provide fee-based services to seniors that are linked to their Social Security deposits. For example, providing Social Security funds for use via a bank debit card can be a convenience to consumers and a revenue source to financial companies. But not all debit cards are created equal. There are regular horror stories of seniors being exploited by companies, having their identities stolen and other abuses. High usage fees and ATM charges may be levied. Seniors who overdraw their cards may be socked with big fees.


The National Consumer Law Center has long been critical of the new Treasury rules, fearing they will harm many older beneficiaries who don't use computers or have Internet access. The group is also worried that the new direct deposit rules don't provide enough consumer safeguards.


The new rules transfer the cost and burden of receiving benefits from the government to the individual, says NCLC attorney Margot Saunders. Among other proposals, the group wants the Treasury to permit more waivers so that people can continue to receive paper checks.


Also, while the Treasury's Direct Express card gets high marks, the NCLC thinks its consumer support services could be overwhelmed when millions of people now getting paper checks realize they are being forced to accept electronic deposits of their benefits. It also wants stepped-up federal oversight of other fee-based cards and of third-party dunning practices and payday lenders.

Social Security rules have long prohibited payments from being garnisheed to satisfy other obligations. But as black-and-white as this rule may appear, the real world is much grayer. Social Security has long permitted recipients to set up "master-sub account" arrangements with banks and other financial institutions. Recipients' Social Security payments go directly into these accounts, and the financial institutions may have the right to use some of the funds to meet beneficiaries' obligations to the institutions.


Rules have been strengthened to exclude check-cashing and payday lenders as sub-account recipients. In nearly all cases, government rules specify that federal payments can only be deposited in an account titled in the name of the recipient.


More on U.S. News & World Report and MSN Money:



Aug 16, 2012 6:49PM

To (Obama & Biden) & (Romney & Ryan)

Subject - Medicare & social security

I'm 74 years old on social security and Medicare. I have sufficient resources that I should make it 120. I have very good health insurance. If it was needed I probably could get by without social security and Medicare.

However, before you political bastards ever even think about cutting or talking about social security & Medicare. I want to see you bastards cut business welfare, banking, energy, communications, etc... The banking industry has received 100's of billions from congress and the fed. Energy receives billions. Many businesses receive special programs that reduce competition. I have been in agriculture all my life and there is absolutely no justification for price supports, subsides, government loan programs, federal crop insurance, house and senate agricultural committees or a department of agriculture. These programs should have been gutted in 1945 and yet we can't get rid of them.

Also, government is very wasteful with numerous duplicated government programs. The efficiency and productive of our tax dollars need to increase by at least 400%.

Until you bastards have handled the above you have no right to even talk about social security & Medicare.

Aug 16, 2012 11:42PM
ok government you should have to cover any fees from these debit cards. 
Aug 16, 2012 11:34PM
Neat!  We can go paperless on SS checks, but photo ID for voting is out??  Something smells here!
Aug 16, 2012 7:56PM
so the us goverment is helping the post office go out of business
Aug 16, 2012 9:33PM

Once again, a bad deal for the individual...

The article and the SSA fail to mention that the individual will be charged a fee for every transaction. People on Social Security can ill afford to be charged to access their money...

The Government gets the to stick it to the recipients again.

By the way... are they laying off any Government workers since they don't have to process paper checks anymore...?

Didn't think so....

Aug 17, 2012 10:32AM

This is really old news for most.

My question is WHY CANT MSN REMOVE ALL THE SPAM GARBAGE POSTS AND BLOCK THE LOWLIFE FROM POSTING THEIR DATING SITE INFO???? Gets to be more of those than actual responses to the articles!

Aug 17, 2012 12:39AM
Our checks have direct deposit, we do not pay any fees or charges, we use our debit cards as credit cards. If you are charged change banks.
Aug 16, 2012 5:10PM
I have Direct Deposit and I thought that everyone was getting their checks this way.  I know it's safer than using the mail because of thief .
Aug 16, 2012 7:53PM
As of today the two Presidential Campaign's have spent $512 Million on Radio and T.V. Ads !!!!!     It's pretty obvious it will top one Billion before the Election is over. How much Social Security would one Billion buy for Americans for one year ?  What a shame. What a waste. There should be a limit placed on Presidential Campaign spending.
Yeah.....Like that will ever happen.

Aug 16, 2012 5:54PM
"It's also a good deal for the Government, which saves Millions of Dollars in expenses with Electronic Deposits"...........And you can bet your a$$ the Government will spend that savings on other Programs instead of leaving that badly needed savings right where it is and right where it belongs.
Harry Reid said very recently that Social Security is several decades from CRISIS, so we won't worry about it now. I've got news for everyone. Harry Reid won't ever worry about Social Security. Neither will anyone else unless the entire Country forces them too.'s well worth reading.

Aug 16, 2012 10:09PM
doggone it, so the poorer recipients of ssdi who can't get bank accounts have to get fleeced by those "debit card" scams and get fee'd to death. man, this country sucks when it comes to being mean to the defenseless.
Aug 16, 2012 8:29PM
There are thousands of elderly recipients who this will affect negatively.  Many aren't computer literate and don't have bank cards.  This will be a disaster to them, but really, in this day and age, who in government cares about the elderly.
Aug 17, 2012 11:21AM
Here we go again with comments about people getting SS who never earned it. IT IS NOT TRUE!  You have to have worked at least 10 years in the US to get SS checks for retirement and then you probably get something close to $300.00/month.  As for all the other on entitlement: it is not an entitlement, we have contributed to this and in the 1960 there was enough money to cover for about 100 year payout until Johnson borrowed from it for his general fund and as all good politicians never made good on his promise to pay it back. We are still waiting for the payback.  Keep you hands of our SS!  As a matter of fact it should be adjusted just like congress voted itself a big raise, so should our elderly get one and stay indexed. Eisenhower said anyone messing with SS is a fool. So I don't have to mention any names here who will be the fool. It will implode our economy if it goes away.
Aug 17, 2012 1:04AM
My wife is disabled and get's her check direct deposit and has for the last 6 six years never had a problem with anything, alot depends on who you bank with. remember these big banks your a number to them, you have to get with the smaller banks who still treat you like your a nieghbor. But it is real nice to have no fear of it being lost in mail or late. always right on time or early for the national holidays. it's no different than the MILLIONS upon MILLIONS of people who have thier payroll check direct deposited like me.
Aug 16, 2012 5:10PM
Lots more convenient for ME since I do on line banking, don't waste lots of money on gas running around paying bills or spend money on envelopes and stamps. At this meager payment I have to save every nickel I can!
Aug 17, 2012 7:57AM
Even the US government is trying to kill the USPS. You would think the government would want to mail checks to help the post office survive. The banks are mainly to blame for the demise of the post office. They say you should bank online and tell us it is safe but then someone hacks their computer system and million of identities are at risk. When was the last ime you heard of a million peoples identities being stollen because a mail truck was stollen? GO USPS and down with the banks and Social Security and the Trearuruy department with their electronic tax fillings and refunds!
Aug 16, 2012 11:23PM
Our Government is out of touch with real life.  90% of the companies that issue the cards to people  stupid enough to go through like H and R block, Quicken, or most others charge OUTRAGEOUS FEES for every time you swipe the card or steal money upfront from the consumer for loading the card.
Aug 17, 2012 4:09AM
Express Debit just burned my sister of $ 1127.00 dollars last week.  We are hating life because of these thieves....  Thank You Uncle Sam.
Aug 17, 2012 5:33AM
why so many negative comments? The switch to direct deposit will save us taxpayers money, with direct deposit indivduals will probably get their money quicker than with a paper check, and for those without bank acccounts the money will be added to a card issued by the government with very little fees that will be less than the amount it costs to get a paper check cashed.  Stop trying to find negativity in everything the Obama Administration does, when they are just trying to help.
Aug 17, 2012 1:34PM
When was the last time that any gov't agency, and especially the federal gov't, done anything without screwing it up completely.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.