Federal checks soon to go all-electronic

Employees, benefits recipients will get money via direct deposit or debit card

Soon all federal employees, vendors and veterans will receive their benefits and paychecks via direct deposit or prepaid debit card instead of a paper check in the mail.

The Treasury Department is phasing out paper checks and will move to a fully automated system by March 13, 2013. The move, announced today, is expected to save $1 billion over the next 10 years in Social Security costs and $120 million annually overall.

Any American receiving federal benefits will be affected. In addition to federal workers, vendors and veterans, the government is replacing paper checks issued for those on Social Security or welfare, railroad retirees, and individuals afflicted with black lung disease, among others.

Eight out of 10 recipients already use direct deposit, said Treasury Fiscal Assistant Secretary Richard Gregg. Individuals applying for benefits on or after May 1, 2011, will receive their payments electronically, while those already receiving paper checks will be switched over to electronic deposit by March 1, 2013. No action is required for those already receiving electronic payments.

Michael Astrue, commissioner of Social Security, urged individuals to switch to electronic payments now rather than wait for the final deadline. “Switching now eliminates the risks of lost and stolen checks and provides immediate access to your money on payment day,” he said.

Individuals without bank accounts will receive their benefits via a debit MasterCard. More than 1.5 million individuals have registered for the card since it was introduced in 2008. Cardholders can make purchases, pay bills and get cash with the card. Funds are available on payment day.

"Even though we have done a good job of encouraging people to switch over, we still are making 120 million payments by mail for Social Security every year and another 15 million annually for veterans and other types of benefits," Gregg said in an Associated Press article by Martin Crutsinger.

The final rules are very similar to the rule proposed in June, although in response to public comments the government is allowing a few exceptions for certain categories of people: the mentally impaired, people who are 90 and older and still getting Social Security benefit checks, and individuals living in remote areas who might have trouble getting to a bank. Gregg anticipates that fewer than 1 percent of current benefit recipients will petition for a waiver, the AP story noted.

The department announced a public education campaign on the topic at the same time. Individuals can switch to electronic payments online at www.godirect.org, via a toll-free helpline (1-800-333-1795), or by speaking with a bank or credit union representative. More information on the Go Direct program is available at its website.

Reader Comments

Sat, Dec 3, 2011

how will the government guard against hackers of an all electronic financial system run by software subject to hackers ?

Tue, Dec 21, 2010 Mona Maryland

Now it'll be easier for them to rob the coffers without a paper trail

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