Government Benefits Going Paperless

The federal government is phasing out paper checks for payments of benefits.

Effective May 1, 2011, new applicants for Social Security, Veterans benefits or other government benefits won’t have the option of getting a check and must choose an electronic payment method.

It costs 92 cents more to process and mail a paper check than the direct deposit option.

The Treasury figures the government will save $1 billion over 10 years with the change; to publicize the change, U.S. Treasurer Rosie Rios Tuesday signed a ceremonial check for the billion dollars to taxpayers.

Already 80% of beneficiaries get payments electronically and the government will phase out paper checks for the 20% who still get checks over the next two years. They have until March 1, 2013, to switch to direct deposit.

Rios says the government hopes to get 100% signed up for electronic payments, but the holdouts won’t get paper checks come March 1, 2013, but debit cards in the mail instead.

The government has launched a public education campaign to help people make the switch. They can enroll online at or talk to a live person by calling 1-800-333-1795.

The government is also working with banks, credit unions, and groups like AARP to help beneficiaries sign up. Some seniors are mistrustful of banks and may be reluctant to change, while others may have something to avoid. While there’s no garnishment in the program, in some cases accounts can be tapped to collect child support payments and taxes.