Would you please explain the rumor I have heard that the Social Security Administration will no longer mail checks to recipients of SSI and SSD, and that we all will need to open bank accounts to receive our benefit incomes through automatic direct deposits?
(Column: Ask the Attorney)
The Check is Not in the Mail: Electronic Payments of SSD/SSI Benefits
William Gottlieb, Esq.
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At the direction of Congress, the U.S. Treasury Department is changing the way Social Security and Supplemental Income Disability recipients (SSI/SSD) receive their monthly benefits. The Treasury Department is the agency that makes payments for all U.S. government agencies.

By January 2, 1999, Treasury will attempt to deliver all benefits by electronic means. In general, mail delivery of checks, the method of benefit receipt now used by over 43% of disabled SSD/SSI beneficiaries, will stop. The change to electronic payment is in part a cost-cutting strategy; in part an effort to help disabled beneficiaries who often have had checks stolen. Social Security reports receiving $60 million in forged checks, $2 million in counterfeit checks, and $3 million in altered checks in 1996.


Do I Have To Use Direct Deposit?

Rules set up for starting electronic payments are different for persons with and persons without a current bank account.

1) Current bank account open. If you already have an open bank account, direct deposit of your disability check is, in general, required by January 2, 1999. A waiver of direct deposit will be granted, however, if you started getting benefits before July 26, 1996, and if you self-certify that the new electronic system would impose a hardship "due to a physical disability or geographic barrier." Psychiatric disability also should qualify. Hardship might exist, for example, if a disabled person had significant difficulty functioning outside the home with crowds. Rules for waiver in cases of disabled persons with bank accounts whose benefits started on or after July 26, 1996 are not settled.

Social Security's New York Regional Headquarters, however, believes that waivers will be granted liberally. It is expected that waivers may be requested at local Social Security offices.

2) No current bank account. Different options for electronic benefit delivery are available to you if you don't have a current bank account. First, you may chose to establish a new bank account for direct deposit of benefits. Low fee accounts are available at some local banks. Call New York City Voices at 212-757-1350 for information on opening low cost accounts and in dealing with problems in opening accounts (i.e., insufficient identification to establish accounts, etc.)

Second, if you elect not to open a bank account, the Treasury Department will open an account for you at a federally insured financial institution of its choice, with access to funds through ATM terminals. This option is not expected to be available until January, 2000. By 2002, disability benefits will be available electronically with state-administered benefits like food stamps.

Third, those without a current bank account may ask for a waiver of electronic benefit delivery if that method would impose a hardship because of "physical disability, geographic barrier, or financial hardship." Again, hardship due to psychiatric disability should qualify. Financial hardship might be established by showing that electronic delivery would cost more than whatever current check-cashing method the recipient is using.


Is Direct Deposit A Good Idea?

For those disabled persons lucky enough to have reliable mail service and a convenient place to cash checks, electronic delivery of benefits might seem like an unnecessary change in a successful situation. Otherwise for those who even once have had a check lost or stolen, acquiring a replacement check often has required a Treasury Department investigation and a wait of many months. Correction of any electronic misdelivery is promised, in general, within a week. The consistency and accuracy of direct deposit is praised by most beneficiaries who use it.
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