Direct Deposit of Social Security Benefit Payments 

 Section 1 

 INTRODUCTION 



1.1 SYNOPSIS 



THE STUDY GROUP RECOMMENDS T HAT THE SOCIAL SECURITY ^ MINIST ^ TI °" ^L™ 

 D^PA^TMENT OF THE TREASURY INAUGURATE A DIRECT-DEPOSIT PROGRAM BY PROVIDING 

 ZIT1 SECURITY BENEFICIARIES WITH FULL AWARENESS AND FREE EXERCISE OF THE 

 OmS TO BE PAID BY CREDIT TO AN ACCOUNT IN A FINANCIAL ORGANIZATION. SUCH 

 A PROGRAM WILL IMPROVE SERVICE TO BENEFICIARIES AND REDUCE COSTS OF THE 

 GOVERNMENT 



The current system of issuing approximately 26 million ;»;Jji a S ecurity Ad-inl.tr.t- 

 (SSA) benefit payment checks each month strains the facilities of the SSA, the 

 Department of thrTreasury, the U. S. Postal Service, the Federal Reserve Banks, 

 md fln!nci«l organizations. As the social security rolls grow there are 

 proximately 1 million net additions per year) the need to develop an alternate 

 method of payment becomes increasingly apparent. The direct-deposit method 

 Snlch is compatible with the existing disbursing system, yet more secure and 

 more efficient, has the potential to fulfill this need. 



An exchange of correspondence between the Treasury Department and the Social 

 S^curitrAdministration in November and December 1972 resulted in a Joint 

 study aimed at identifying, quantifying, and proposing solution, toprobl... 

 associated with benefits paid by credit to accounts in financial organizations, 

 with the expectation that the results of the study would form a sound basis 

 for commencing a comprehensive direct-deposit program. 



This report documents the results of the study. Of the eleven factors identified 

 prior to the study as potentially significant problems (page 9) 

 only one proved significant enough to warrant a recommendation for a specific 

 solution." The one^roblem is encountered when the SSA addresses a communication 

 to a beneficiary to advise him of suspension, termination, or reduction of his 

 benefit payments (adverse actions), and the communication is mailed to the 

 individual "in care of his financial organization (the only address on *£* 

 in the SSA) . There is no assurance that the financial organization will forward 

 such a communication to the beneficiary quickly enough to allow him ^protest 

 the action, if that is appropriate, or to even make him aware of it ^ fore the 

 action takes place. The Study Group recommends that the usual mailing addresses 

 of all beneficiaries who are being paid by credit to accounts in financial 

 organizations be incorporated in the SSA Master Beneficiary Record, and that .11 

 adverse action notices be mailed directly to such addresses. It is significant 

 to note that implementation of this recommendation will provide SSA with the cap- 

 ability to deal with all other problems which have been identified by the Study 

 Group as potential future problems. 



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