By Mark Miller
CHICAGO, Jan 10 (Reuters) - A procrastinators' alert: anyone who gets a benefit check from the federal government has less than two months to go paperless.
March 1 is the deadline for nearly everyone who receives Social Security, Supplemental Security Income (SSI) or veterans' benefits to switch to the government's new electronic payment system. The Go Direct program - launched in 2005 - has already converted 93 percent of all benefit payments; new recipients have been all paperless since 2011.
After March 1, the only remaining exceptions will be beneficiaries over age 90, residents of remote areas that lack electronic payment options, or people with mental impairment issues that hamper their ability to manage finances.
Folks who don't meet the deadline will continue to receive their benefit checks, officials concede. But they also can expect to hear from the federal government, which will be intensifying efforts to finish the conversion after March 1.
The shift is expected to save the government $1 billion over ten years. Processing and distributing an electronic payment costs just 10 cents, compared with $1 for a paper check, says Walt Henderson, director of the Go Direct campaign at the U.S. Department of the Treasury.
Electronic payment also is better for consumers: payments are available immediately as cash, and there's no possibility of delayed or lost checks - as seniors affected by Hurricane Sandy experienced in November when delivery of hundreds of thousands of checks via the U.S. Postal Service were delayed.
Five million beneficiaries still haven't converted. If you're among them, you've got two basic options: direct deposit to a bank account, or sign up for a Direct Express debit card to access benefits without using a bank account.
Electronic deposit to a checking account is the best approach, because it offers the greatest withdrawal flexibility. You will be subject only to whatever overall account limits and fees you've already agreed to on your account. But one-third of the beneficiaries still receiving paper checks are "unbanked," - meaning that they don't have a checking account, Henderson says. Many of these beneficiaries are low-income or disabled recipients of SSI.
If you can't qualify for or afford a standard checking account, there is still a second-best choice for consumers reluctant to use the debit card approach: You can open an electronic transfer account (ETA) - a special low-cost bank account - at a participating bank or credit union. ETA account fees cannot exceed $3 per month, and you can make at least four free cash withdrawals per month. However, just 316 providers have joined the ETA program so far - "not as many as we'd like," Henderson says. Details at www.eta-find.gov/
The Direct Express debit card is the least attractive option, because it carries additional fees and limitations. You're entitled to one free cash withdrawal for each deposit credited to your account per month, as long as you use one of the 60,000 ATMs in the program's surcharge-free network. A 90 cent fee is charged for additional in-network withdrawals, and higher fees can be charged if you use an ATM at a bank that does not participate.
Henderson notes that it's also possible to make unlimited free withdrawals by using Go Direct to make purchases at any retailer accepting MasterCard debit cards. "You can use it to make purchases and get cash back, just like any debit card," he says. "Why bother to get cash out to use at the store when you can just use the card?"
Another concern is identity theft that allows fraudsters to divert benefit payments. Relatively few cases have been reported. The Social Security Administration Office of the Inspector General said in November that it had logged more than 19,000 reports of possible unauthorized changes or attempts to make changes to direct deposits. That's a tiny fraction of the five million benefit checks mailed by the government each month.
However, the elderly are especially susceptible to financial fraud, and a lost benefit payment can be devastating to seniors or low-income recipients on fixed income who depend on monthly benefits to meet living expenses. Henderson says the Treasury Department and the Social Security Administration have been beefing up safeguards. He notes, however, that even in cases of fraud, beneficiaries are held harmless and that the Social Security Administration quickly replaces lost benefits.
Determine which option is best for you by calling the program's toll-free call center at 1-800-333-1795 or its website www.GoDirect.org
Before calling the toll free number, have at the ready your most recent benefit check and payment amount and your Social Security number. If you are planning to use direct deposit to a bank account, also have your financial institution's routing number and your own account number on hand. Also use the call center toll-free number if you want to apply for an exemption.
What will happen to procrastinators who haven't converted by the March 1 deadline?
"Police won't be knocking on your door, but we will contacting people directly by mail," Henderson says.