Section 1 



1 . 2 BACKGROUND AND PURPOSE 



PRESENTLY OVER 200,000 SOCIAL SECURITY BENEFICIARIES ARE BEING PAID BY CKKUlT 

 TO ACCOUNTS IN FINANCIAL ORGANIZATIONS. AN EXCHANGE OF CORRESPONDENCE BETWEEN , 

 THE TREASURY DEPARTMENT (NOV. 9, 1972) AND THE SOCIAL SECURITY ADMINISTRATION 

 (DEC 13 1972) RESULTED IN A JOINT STUDY AIMED AT IDENTIFYING, QUANTIFYING, | 

 AND PRESENTING SOLUTIONS TO PROBLEMS ASSOCIATED WITH THI S METHOD OF PAYMENT. „ 



For many years, under Treasury regulations and SSA policy and procedures, 

 beneficiaries have had the option of receiving their benefit payments by 

 credit to their accounts in financial organizations. A beneficiary 

 accomplishes this by giving his financial organization a power of attorney, 

 and by request to the SSA. The power of attorney given to the financial 

 organization, which is in force for up to twelve months and may be renewed 

 for additional 12-month periods, authorizes the organization to receive, 

 endorse, and collect checks which are drawn in favor of the beneficiary. 



Upon SSA receipt of the beneficiary's request, the beneficiary's address 

 on the SSA Master Beneficiary Record (which accomodates only one address) 

 is changed to "in care of" the financial organization. Thereafter, benefit 

 checks are drawn payable to the beneficiary and mailed to the financial 

 organization. In this report, when the term "power of attorney" is used to 

 describe a beneficiary or a method of payment, it refers to this method 

 of receiving payment at a financial organization. 



Currently, SSA certifies, the Treasury issues, and the Postal Service 

 delivers on the 3rd of each month approximately 26 million social security 

 benefit checks. Over 200 thousand of these checks are mailed directly to 

 financial organizations for credit to beneficiaries' accounts under the 

 power-of -attorney procedure. Historically, the SSA has been concerned 

 about certain problems associated with paying beneficiaries at financial 

 organizations which, briefly, are (1) the lack of abilitv to send communicatiov 

 directly to beneficiaries, (2) the failure of beneficiaries to notify the 

 SSA of events which may affect their monthly benefits (since they do not 

 personally receive the check), and (3) the potential for overpayment situation 

 created when payments continue to be deposited to the account of a non-entitlel 

 beneficiary. 



Because of concern about the problems that exist, and problems that were 

 thought to exist, in the power-of-attorney method of payment (all of which 

 have been considered in this study) , the SSA has until recently restricted 

 this optional payment method to beneficiaries who could demonstrate a 

 significant need for it. In November 1970, SSA policy was liberalized to 

 allow a beneficiary to be paid under the power-of-attorney method if he 

 fears theft of his check, or to establish credit, or simply for his own 

 convenience. Because of SSA concern about providing information to these 

 beneficiaries, its district offices are required to caution a beneficiary that 

 under this method of payment he may not receive all correspondence addressed 

 to him by the SSA, and that he should request his financial organization to 

 forward all such correspondence to his usual mailing address (SSA Claims Manm 

 5760 and 57il) . Presently, there are no restrictions on the exercise of this 



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