Social Security Benefits Go Electronic May 1

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Paper checks no longer an option for anyone applying for federal benefits

Paul Gada

“If you are seeking Social Security benefits, you need to have a plan in place for receiving your benefits” – Paul Gada, Allsup

Anyone applying for federal benefits on or after May 1, 2011, will receive payments electronically, as the U.S. Department of Treasury phases out paper checks. As a result, it’s important for people applying for Social Security Disability Insurance (SSDI) benefits, or other Social Security benefits, to plan accordingly, advises Allsup, which represents tens of thousands of people in the SSDI application process each year.

Effective May 1, paper checks no longer will be issued to individuals applying for benefits. Instead, applicants must choose either direct deposit into a traditional bank or credit union account or deposit onto a payment card, such as a debit card. The Treasury Department offers the Direct Express® Debit MasterCard®. The government estimates stopping paper benefit checks will save Social Security $1 billion over the next decade.

“If you are seeking Social Security benefits, you need to have a plan in place for receiving your benefits,” said Paul Gada, personal financial planning director for the Allsup Disability Life Planning Center. “The Treasury Department’s rule means that all participants will need to have an existing account or create an account to receive electronic payments through direct deposit. If you don’t, an account will be created for you.”

Those already receiving paper checks, including Social Security disability benefit recipients, will need to switch to an electronic payment option by March 1, 2013. Those who do not choose electronic payment at the time they apply (or by March 1, 2013, if already receiving benefits)—will receive benefits via the Direct Express card to avoid interruption of benefits, according to the Treasury Department. Current beneficiaries will receive information about making the switch with upcoming payments.

Below, Allsup offers details on debit and bank or credit union account options for Social Security beneficiaries. Find more details about Social Security disability benefit payment options online at

Debit Card: Streamlined Payment Option
Beneficiaries who do not take steps to establish a method for receiving payments, such as a bank account or debit card, will automatically receive the Treasury Department’s Direct Express card. Direct deposit has some safety advantages. For example, there is no paper check to get lost or stolen. Additionally, benefit payments placed on the debit card or deposited into a bank or credit union are insured by the Federal Deposit Insurance Corp. (FDIC).

“If you are evaluating your options and don’t have an account already—it’s important to be aware of potential fees through any service you choose,” Gada said.

The following are features of the Treasury Department’s Direct Express card, which can be used to compare with other offerings available to consumers.

Debit card free features:

  •     No cost to sign up and no monthly maintenance fees.
  •     No cost for purchases made at retail stores.
  •     Banks or credit unions that display the “MasterCard” acceptance mark must provide cash back with no surcharges.
  •     One (1) free ATM cash withdrawal per month for each deposit made onto the debit card (Additional withdrawals following the first one carry a fee; see below).
  •     Free basic customer service, including calls, web account access, deposit and low-balance notifications. One replacement card each year.

Debit card potential costs:

  •     Cash back fee with some purchases and some banks.
  •     Surcharges from some stores for card use.
  •     Charge to use ATMs outside the Direct Express network.
  •     ATM withdrawals after the first one cost 90 cents per withdrawal, plus non-network ATM surcharges.
  •     Electronic bill payments cost 50 cents per bill paid using the card.
  •     A mailed, monthly paper statement costs 75 cents.
  •     Fees for purchases made outside the United States.

Compare Financial Options For Flexibility
No matter the method someone chooses for receiving benefits, such as debit card or traditional checking account, there are likely to be fees and costs for an account. For example, checking accounts may charge fees for paper statements, ATM withdrawals and overdraft services.

“It’s important to realize you have options for receiving electronic deposits from the Treasury,” Gada said. “By looking ahead to how you will use your benefits and comparing your options, you’ll have a better chance of finding a cost-effective solution to manage your Social Security benefits.”

Anyone with questions about eligibility for Social Security disability benefits can contact the Allsup Disability Evaluation Center at (800) 279-4357 for a free disability evaluation.

Allsup is a nationwide provider of Social Security disability, Medicare and Medicare Secondary Payer compliance services for individuals, employers and insurance carriers. Founded in 1984, Allsup employs nearly 800 professionals who deliver specialized services supporting people with disabilities and seniors so they may lead lives that are as financially secure and as healthy as possible. The company is based in Belleville, Ill., near St. Louis. For more information, visit

The information provided is not intended as a substitute for legal or other professional services. Legal or other expert assistance should be sought before making any decision that may affect your situation.

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Rebecca Ray
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