It is too easy for mistakes to occur when paper checks are being sent in the mail. Whether it be misdirected mail, wrong addresses, or theft, there are many worst case scenarios where Social Security benefits do not make it to the beneficiary. Every year, thousands of checks are reported as lost or stolen, amounting to millions of dollars. In an effort to decrease the occurrence of these kinds of errors, the Social Security Administration is implementing a new direct deposit system, mandatory for all recipients of Social Security benefits by 2013, regardless of payment dates. Currently, beneficiaries are encouraged to have their payments directly deposited into their private bank accounts. Further, if you apply for disability benefits on or after May 1, 2011, you will be required to receive payments through direct deposit.
Beneficiaries exchange their bank account information with the SSA directly and funds are transferred electronically, often immediately. This is the most secure way for benefits to be paid, as there is virtually no chance of the wrong person getting hands on the money. It is also the fastest method, as direct deposits arrive much faster than checks in the mail. The SSA reports that 85% of beneficiaries are already using this option voluntarily.
The other option that is available is a DirectExpress Debit Mastercard, made available by the SSA starting in 2008. This is basically a debit card that the SSA makes deposits to electronically and can be used at ATMs to retrieve cash, or to purchase items directly at retail establishments that accept debit cards. This option is best for people who do not have bank accounts for whatever reason. There are already an estimated one million users.
Not only will the mandatory paperless payment policy reduce the chance for payment errors, it will save significant money, time, and resources. By not printing checks, the SSA will not have to pay for check-printing services, saving them, as well as the working taxpayers who fund the program, a lot of money. Printing checks is time consuming and a waste of paper and ink, so going paperless is also more efficient while being environmentally friendly.
It is interesting to note that many other government programs that issue payouts have gone paperless in recent years, including the United States Supplemental Food Assistance Program, otherwise known as the Food Stamp program, which no longer involves stamps at all, but a pre-loaded EBT card, or debit card.
The SSA should find little opposition to a program that is more secure, efficient, and economical for everyone.