If you are used to receiving your benefit check by paper check, you will soon be advised by SSA to sign up for either direct deposit into a bank account or for a debit card to receive your payment. Because paper check processing costs over $1 per check vs. about 8 cents for an electronic deposit, SSA estimates it can save $1 billion over the next 10 years.
There are very few exceptions to SSA’s requirements for electronic deposits. Elderly retirement recipients born before May 1, 1921 will continue to receive paper checks automatically and those without ready access to a bank can apply for a waiver, although SSA’s “800 number” system requires a waiver applicant to navigate through multiple levels of voice mail before it allows you to talk to a live person about a waiver. In other words, SSA wants to make it very difficult for beneficiaries to continue to receive paper checks. 1
There are obvioulsly many benefits to an electronic payment system aside from cost savings to SSA. In theory payment issuance should become more secure and payees can avoid the problems associated with stolen checks and theft of cash.
At the same time, Social Security beneficiaries can be victims of identity theft, and bank error. Further, banks and other deposit institutions may charge fees for maintaining checking accounts or for ATM access.
Despite reservations that you may have, paper checks are quickly becoming a relic of the past at the Social Security Administration. You can sign up for direct deposit or a DirectExpress debit card at GoDirect.org or by calling 800-333-1795. 2
Finally, make sure to meet with a bank representative to advise the bank that deposits from Social Security will now be electronically deposited. Social Security funds are not subject to garnishment for civil judgments (like credit card collection lawsuits) but if your Social Security funds are “co-mingled” with non-Social Security funds, your money may be at risk.
Many banks offer the option of creating a “sub-account” under your main checking or savings account that will be designated as an account containing Social Security money only. This sub-account, in theory, would be protected from garnishment by civil judgment creditors (but not by the IRS or child support creditors).
I can tell you from my bankruptcy practice that it is much easier to prevent a bank account levy than it is to get money back, so take the time now to communicate with your bank about the protected nature of your account.