Social Security Administration Goes Digital

A 76-year old federal agency is finally getting a facelift.

According to the Associated Press, as of next year, the nearly 73 million payments that the Social Security Administration issues a month will go digital.

Instead of the traditional paper check that Americans are long since used to seeing, recipients will be required to access their money electronically, via a direct deposit account or a debit card.

The changes not only affect grandpa and grandma, but veterans, railroad engineers, and people on Supplemental Security Income (SSI).

"It's just that natural progression of moving to how people are used to receiving their funds," Walt Henderson, the man in charge of the Treasury Department's funds transfer division, said in an interview with the AP's Stephen Ohlemacher.

For the 90 percent of recipients who already have a direct deposit account, it will just represent the agency's official recognition of an everyday occurrence.  Yet for those who don't have direct deposit--or who are leery of ones and zeros--it's a rude awakening.

"This will affect some very frail elderly people who are living by themselves, many of them, and are doing well, but usually within the context of the old paper check that they deposit in the bank," Web Phillips, a senior policy adviser for the National Committee to Protect Social Security and Medicare, said.

The digitizing of checks is just one of many moves to modernize the way that the Social Security Administration does business. The Agency also operates a variety of social media accounts to enable those seeking information from them or looking to engage with them an alternative to phone calls and direct mail. Its Facebook page, for example, has close to 24,000 fans - a number that has doubled over the past nine months, according to OhMyGov Media Monitoring.

The move to social media is well timed, as seniors now compose the fastest growing demographic on Facebook, and the fastest growing age group to adopt tablet technologies to connect to one another, the grandchildren, and organizations like SSA online.

But with the cons, also come the benefits.  According to Henderson, electronic funds don't carry the liability of fraud and inefficiency that the old paper checks did.  Nearly 540,000 federal benefit checks were reported lost or stolen in 2010. That won't be an issue with the new, digital system.

"You think of that paper floating out there in the delivery system, with personal information on it, it's much more susceptible to fraud versus an electronic payment," Henderson said.

The Social Security Administration is already singing the new system's praises.  The switch from paper to digital will save them a whopping $120 million a year--a billion or more over the next decade, according to estimates by the Treasury Department.

But as the agency readies for the change, advocates for seniors and the disabled caution that the new system might leave the SSA's core constituency stranded on the digital highway.

"This has to be handled very carefully," Phillips said. "And with a lot of sensitivity so that there aren't people who lose track of payment or don't understand that they have a card that came in the mail that is the source of their payment. That's our concern."

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