Federal benefits to be paid electronically by 2013

By Ed O'Keefe
Washington Post Staff Writer
Monday, April 19, 2010

Most Social Security and other federal benefits payments will be made by direct deposit by 2013, the Treasury Department is set to announce Monday. The decision will eliminate about 136 million paper checks sent by the Social Security Administration, Department of Veterans Affairs, Railroad Retirement Board and Office of Personnel Management.

The switch is part of a broader plan to shift away from paper-based payments and transactions, and it will require businesses using Federal Tax Deposit coupons to move to electronic tax payments. The Treasury also plans to cut the purchase of paper savings bonds through payroll sales. The plans should save taxpayers about $400 million in processing, postage and paper costs in the first five years, the Treasury said.

Americans who enroll on or after March 1, 2011, for benefits payments will receive them by direct deposit or be enrolled in the government's Direct Express Debit MasterCard program if they do not provide bank account information. Beneficiaries now receiving payments will switch to direct deposit or the debit card by March 1, 2013, after agencies inform them of the changes, Treasury said.

Efforts at mandating direct payments have failed because the government had not established the debit card program for people who don't have bank accounts, said Assistant Treasury Secretary Richard L. Gregg. "Now we have it," he said. "It's a proven card, and we think it's a very good alternative."

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