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Federal Eye
Posted at 02:30 PM ET, 03/01/2012

Countdown begins on feds ending paper benefit checks

The government on Thursday started a one-year countdown toward converting to electronic-only payments for many of the largest federal benefit programs, in which 7 million beneficiaries still receive paper checks.

Effective March 1, 2013, beneficiaries will be required to receive their payments either through direct deposit or via a debit card. Benefit programs affected by the change include Social Security, Supplemental Security Income, veterans benefits and Railroad Retirement Board and federal employee pensions. The programs send out more than 73 million payments a month, about 90 percent electronically; those payments totaled $75 billion in January.

“We don’t want them all waiting until the last minute this time next year. We want to get the word out that there’s an easy way to sign up,” said Walt Henderson, director of the electronic funds transfer strategy division in Treasury’s Financial Management Service. Beneficiaries can switch to electronic delivery online or by calling 800-333-1795.

“We’re hoping that practically everyone will listen to our message,” Henderson said. “While there are people who are attached to their paper checks, by and large people are receptive to our message about the ease and convenience of receiving payments electronically.”

Since May 2011, new applicants for the benefits must choose direct deposit or the debit card. About 4 million people who had been receiving paper checks as of the start of last year have since converted to electronic delivery.

The campaign to encourage electronic receipt of benefits dates to 2004 but it was relaunched after Treasury published a final rule in December 2010 to gradually phase out paper checks for federal benefit payments. The department included reminders about the impending deadline with this month’s mailings and is working with more than 1,800 organizations to spread the word. “We reach out to partner organizations, community organizations, so that people are not just hearing it from us, they’re hearing it from organizations in their community, such as an organization for the elderly,” Henderson said.

He added: “We hope to spend the final year encouraging people to choose, but the regulation does state that if a person doesn’t switch by this time next year we would have to send them a [debit] card in order to not interrupt their payments.”

The Treasury estimates that using only electronic payments in those programs will save about $1 billion over 10 years in printing, distribution and other costs.

The government also still cuts paper checks in certain other programs, such as payments to some vendors, but is working to convert to electronic delivery of those, as well.

By  |  02:30 PM ET, 03/01/2012

 
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