June 21, 2021

Bucks Blog: Worrying About Electronic Benefits Deadline? Don’t

March 1 is the deadline set by the federal government for converting all benefits payments — including Social Security — to electronic deposits.

That’s the date by which recipients are supposed to choose direct deposit of their monthly payment into a bank account or to a prepaid debit card, like the government’s Direct Express card.

But those who don’t switch by the deadline apparently won’t face any serious consequences, aside from continued pestering from the government.

Those who fail to switch will still receive paper checks, said Walt Henderson, director of the Treasury Department’s Go Direct campaign. Those recipients will, however, get mailings from the government after the deadline, in an effort to encourage them to adopt electronic payments, he said.

“We don’t have the authority to change their payment method without their permission,” he said in a telephone interview. But they may be mailed a Direct Express card, and urged to activate it.

But, he said, “We won’t automatically switch them.”

Those who continue to hold out for paper will continue to hear from the government, he said. But they won’t get telephone calls, because of the widespread use of telephone schemes aimed at those who receive benefits.

“The whole premise is to educate people about electronic payments,” he said.

The move is part of an effort by the Treasury Department to shift transactions away from paper to save money and reduce potential errors. All new applicants for federal benefits, as of May 1, 2011, have had to select an electronic delivery method.

Currently, about 93 percent of payments to recipients of Social Security and Supplemental Security Income are made electronically — either through direct deposit into a bank account, or onto a prepaid debit card. (Some privately issued prepaid cards can also be used to receive payments, as long as they are insured by the Federal Deposit Insurance Corporation and meet other requirements.)

But about 5 million recipients still get paper checks, so the Treasury Department is aiming at those people in the next two months to encourage them to choose an electronic option. In research conducted last fall, Mr. Henderson said, 75 percent of those still receiving paper checks said they intended to switch by the deadline.

Those age 92 or older are exempt from the requirement. Others who don’t want to switch are supposed to apply for a waiver. They must either have a “mental impairment” that prevents them from using the card or live in a geographically remote area where it may be difficult to use them.

Some consumer advocates raised concerns that the waiver process was too complex for people to navigate. About 600 waivers had been issued as of the end of December, Mr. Henderson said.

Given that there is no real punishment for not complying with the switch, does it make sense to have people fill out forms — which must be notarized — to apply for waivers? In a follow-up e-mail, Mr. Henderson said, “Our expectation is that individuals receiving federal benefit payments such as Social Security will comply with the requirement to receive those funds electronically by direct deposit or the Direct Express card.” He added that the waivers exist to be “sensitive to certain populations who may have trouble complying, but who want to be in compliance with regulations related to their payments.”

Meanwhile, Treasury has continued issuing statements urging recipients to switch. “Switching to an electronic payment is not optional — it’s the law,” David Lebryk, commissioner of the Treasury Department’s Financial Management Service, said in one announcement, which was titled, in part, “Time is running out.”

Representatives of Fisca, a trade group representing check-cashing providers, have complained that the government is “needlessly scaring” benefits recipients into thinking they may have to go without their payments after March 1, if they don’t switch to electronic deposit.

Do you plan to switch to electronic payments for your federal benefits by March 1?

Article source: http://bucks.blogs.nytimes.com/2013/01/10/worrying-about-electronic-benefits-deadline-dont/?partner=rss&emc=rss

Bucks: Beginning of the End for Paper Social Security Checks

Beginning Sunday, the federal government is “retiring” paper Social Security checks and switching to electronic deposits for new benefit applicants.

Here are the details: As of May 1, paper checks are no longer an option for anyone applying for new federal benefits, whether through Social Security or other programs. Instead, applicants must arrange for direct deposit to a checking or savings account. People who don’t have bank accounts, or who simply prefer it, can receive their payments on a prepaid “Direct Express” debit card.

The change means that new applicants for benefits should have their bank account information available — including their checking or savings account number and their bank’s routing and transit number, a nine-digit number typically found on the lower left-hand side of a paper check.

People who are already receiving benefits have about two more years — until March 1, 2013 — to switch. Help is available by going to www.GoDirect.org, or calling a toll-free helpline at 1-800-333-1795.

The change that starts Sunday is part of a plan to shift to nonpaper payments, which are considered safer and more convenient for most people because they can’t be lost like paper checks. Roughly 80 percent of all federal benefit recipients already get payments electronically, so they’re not affected by the change.

The Treasury Department also said electronic payments were less expensive to process. A direct deposit costs 92 cents less than issuing payments via a paper check. That means the move to eliminate paper will save taxpayers an estimated $1 billion over the next decade, the department said.

David Certner, legislative policy director of the AARP, said the group was watching for any issues that arise with beneficiaries who don’t have bank accounts and so must use the debit card option. Roughly 4 million current Social Security recipients fall into that category, he said, but they’re not affected yet by the change.

It’s unclear yet just how many new applicants will be “unbanked.” Such recipients may not be familiar with using plastic cards and may need advice on how to use them to minimize any fees. For example, while it is possible to manage the cards in a no- or low-fee way, there are some instances in which charges apply. Cardholders get one free A.T.M. withdrawal each month, but after that they are charged 90 cents per withdrawal, according to www.godirect.org. And users are charged 75 cents if they want an account statement. “For us, the key issue is making sure people get the help they need,” Mr. Certner said.

Have you arranged for direct deposit of your Social Security benefits, or do you use a debit card? What has your experience been?

Article source: http://feeds.nytimes.com/click.phdo?i=f0310eb6554ca692252bb280d55f813c