Social Security checks to go electronic next May, new rules say

According to new rules published last week by the Treasury Department’s Financial Management Service, Social Security recipients can expect to receive their checks through electronic funds transfer (EFT) beginning May 1, 2011. Officials believe the move to direct deposit could save upwards of $1 billion over the next 10 years.

On December 21 final rules were published, pushing back the effective date for the EFT-only program three months, from March 1 to May 1. Proposed rules issued in June 2010 were changed to generally require all federal benefits including Social Security, Supplemental Security Income, Veterans Affairs, Railroad Retirement Board, Office of Personnel Management benefits and other non-tax payments to be made electronically.

Benefit recipients have the option of direct deposit into a bank or credit union account of their choice or into a Direct Express, a MasterCard debit card account provided by Comerica Bank. More than 1.5 million beneficiaries have signed up for the Direct Express card since it was introduced in 2008 with 94 percent of surveyed users saying they were satisfied with how the card worked.

“Eight in 10 federal benefit recipients already use direct deposit, and now millions of additional retirees, veterans and other Americans will also receive their money in the safest, most reliable way – electronically,” Treasury Fiscal Assistant Secretary Richard L. Gregg, said in a statement.

But some advocacy groups fear that new changes to use direct deposit will unfairly discriminate against unbanked or under-banked recipients.

“While initiatives such as this can increase Social Security’s efficiency, reduce fraud and abuse, and save money … we need to balance those goals with protecting millions of older Americans who stand to see significant changes, or may face new challenges,” said Cristina Martin-Firvida, director of economic security in government relations at AARP, told Government Executive in an interview.

To help with the transition, the final rules have waived the EFT requirement for recipients born prior to May 1, 1921, who are receiving payments by paper check on March 1, 2013; for payments not eligible for deposit to a Direct Express prepaid card account; and for recipients whose Direct Express card has been suspended or cancelled. In addition, this rule establishes the criteria under which a payment recipient may request a waiver if the EFT requirement creates a hardship due to his or her mental impairment or remote geographic location.

A new public information campaign has been launched at, which is part of an ongoing financial literacy programming and partnerships with hundreds of national, regional and local organizations.

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