Beginning May 1, all people newly applying for Social Security, veterans benefits or other non-tax federal payments such as pensions will receive their payments electronically, according to the U.S. Treasury Department. Paper checks by mail will no longer be an option for them.
The switch was initially slated to take place March 1. But a Treasury spokesman says officials were asked to delay that implementation date to give more time for education and outreach to the public.
Current Social Security recipients who get their monthly checks by mail will have to switch to electronic payment by March 1, 2013. That change will not affect about 86 percent of Social Security recipients who already receive their payments electronically.
In most cases, the money is direct-deposited electronically into bank accounts. But people who don't have accounts can enroll in the government's Direct Express Debit MasterCard program. Their benefits will become value on cards that they can use to make purchases, pay bills or get cash at ATMs.
The switch is expected to save the federal government more than $120 million in mail and paper fees in the first year. It will also cover railroad and federal civil service retirees.
Treasury spokeswoman Tepricka F. Morgan says that having federal benefits paid electronically by direct deposit into a bank or credit union account, or into a Direct Express card account, is safer, faster and more reliable than receiving paper checks.
In 2010, she says, more than 540,000 Social Security checks were reported lost or stolen and had to be reissued.
"Checks can be delayed with weather-related events, like the flooding that's expected in the Midwest next week, so this is one less worry that a beneficiary would have to have," she adds.
AARP Executive Vice President Nancy LeaMond lauded the Obama administration for its efforts to increase efficiency, reduce the potential for fraud and abuse, and save money.
"AARP appreciates the efforts initiated by the administration to modernize Social Security and other payment systems that millions of Americans rely on each and every day for their financial and retirement security," she said.
For questions about receiving your benefits electronically, call the U.S. Treasury Processing Center's toll-free help line at 1-800-333-1795, or speak with a bank, credit union or Social Security Administration representative.
Carole Fleck is a senior editor at the AARP Bulletin.