Social Security Switches to Direct Deposit for Benefits

With enrollment in Social Security Disability programs skyrocketing, and the Social Security Administration (SSA) staring down a potential solvency crisis in as little as seven years, every little bit of money the SSA can save, they’re going to save. Phasing out paper checks for Social Security Disability benefits is expected to save the SSA a hefty one billion dollars over the course of the next ten years. While that’s just a drop in the bucket compared to the overall expense of the disability program, it does amount to a whole lot of benefit checks for individuals (or Direct Deposits, as the case may be).

Most Social Security Disability beneficiaries will have until March of 2013 to switch to either Direct Deposit or a pre-paid MasterCard. You can switch sign up for Direct Deposit by visiting or by stopping in to your local SSA field office.

Initially, everyone who receives Social Security Disability benefits was going to be required to switch to receiving their funds through electronic means, but the SSA has made some changes to the regulations to allow for the fact that Direct Deposit isn’t feasible for some individuals. As it stands, you can opt out of Direct Deposit and continue to receive a paper Social Security Disability Insurance (SSDI) check if you are over 90 years old, are mentally impaired, or live in particularly remote areas of the country where Direct Deposit isn’t practical.

Of course, that leaves the majority of Americans receiving Social Security Disability benefits with two choices: Direct Deposit or the Direct Express pre-paid MasterCard. In addition to those receiving Social Security Disability benefits, these changes will affect those receiving veterans’ benefits and other federally funded benefit payments.

These changes will affect roughly 20% of people currently receiving Social Security Disability benefits. Most of the remaining 80% are already receiving their benefits through Direct Deposit, which has been an option for several years.

As of May 2011, those who are currently in the process of applying for Social Security Disability benefits will be affected immediately if their claims are approved, as the SSA will simply not give them the option of receiving a paper check unless they meet the narrow requirements outlined above.

For those who opt to use the debit card, there will be no monthly fees, overdraft fees, or sign up costs. This was included in the regulations in part because of concerns from those who have received state unemployment benefits via debit cards. In those cases, the various fees often placed an undue burden on the person receiving benefits. The debit cards now being issued are designed to be more hassle free.

For those opting to receive Direct Deposit, your Social security disability benefits will be deposited directly into your checking or savings account, where you will be able to access the money. In addition to saving the SSA money, this change is expected to save hassles like lost checks and identity theft.

While the changes are not mandated until March of 2013, the SSA is encouraging Social Security Disability benefits recipients to sign up for the program sooner. Those who desire to switch to Direct Deposit before the deadline may do so at any time.