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GN 02402.001: Direct Deposit as a Form of Electronic Payment

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  • Effective Dates: 08/22/2012 - Present
  • Effective Dates: 02/06/2018 - Present
  • TN 40 (04-11)
  • TN 91 (02-18)
  • GN 02402.001 Direct Deposit as a Form of Electronic Payment
  • A. Background
  • A. Background of Treasury’s electronic payment process
  • On December 22, 2010, the Department of the Treasury (Treasury) amended its regulations to require Title II and Title XVI individuals who file for benefits on or after May 1, 2011, to select a form of electronic payment by either direct deposit or the Direct Express® debit card. Currently entitled Title II beneficiaries and Title XVI recipients, who receive their payment by check (prior to May 1, 2011), can continue to do so until March 1, 2013. However, individuals may request an exemption from Treasury to the electronic payment requirement as described in this section.
  • The Department of the Treasury’s Fiscal Service (Treasury) requires that Federal payments be made electronically. As a result, all Social Security beneficiaries or recipients must receive their payments electronically. This includes new beneficiaries or recipients and beneficiaries or recipients who have been receiving check payment for a certain period.
  • B. Exemptions to the electronic payment requirement
  • The Treasury may grant one of the following exemptions:
  • Treasury may grant one of the following exemptions:
  • * Treasury automatically grants an exemption in instances where:
  • * the beneficiary or recipient was born prior to May 1, 1921 and continues to receive payment by check, or
  • * the payment is not eligible for direct deposit to a Direct Express prepaid debit card account, or
  • * the beneficiary or recipient’s Direct Express debit card has been suspended or cancelled.
  • * Treasury may grant an exemption in instances when a beneficiary or recipient requests an exemption from the electronic funds transfer (EFT) requirement and the beneficiary or recipient:
  • * has a mental impairment that prevents him or her from handling their payments electronically and he or she is not assisted by a representative payee.
  • * lives in a remote geographic location that does not have the infrastructure necessary to receive payments electronically.
  • 1. Treasury automatically grants an exemption where:
  • * the beneficiary or recipient was born prior to May 1, 1921 and continues to receive payment by check, or
  • * the payment is not eligible for deposit to a Direct Express® prepaid debit card account, or
  • * the beneficiary or recipient’s Direct Express® debit card has been suspended or cancelled.
  • NOTE: Foreign beneficiaries who refuse electronic payment are not required to apply for an exemption. See GN 02402.201B for more information concerning foreign beneficiaries.
  • 2. Treasury automatically grants a temporary exemption through February 28, 2013 where:
  • * the beneficiary or recipient is already receiving payment by check prior to May 1, 2011, or
  • * the individual files a claim for payment prior to May 1, 2011 and requests payment by check at that time.
  • NOTE: Advise individuals that on March 1, 2013, these temporary exemptions expire and the individuals must choose a form of electronic funds transfer (EFT).
  • 3. Treasury may grant an exemption where a beneficiary or recipient has requested an exemption from the EFT requirement and the beneficiary or recipient:
  • * has a mental impairment to handle their payments electronically and is not assisted by a representative payee, or
  • * lives in a remote geographic location that does not have the infrastructure necessary to receive payments electronically.
  • NOTE: Treasury is responsible for determining if an individual is eligible for an exemption. SSA is not responsible for the development of the determination.
  • Individuals who indicate that an EFT payment would impose a hardship because of a mental impairment to handle electronic payments or reside in a remote geographic location, which lacks infrastructure to provide electronic payments, must apply with Treasury for an exemption.
  • Individuals who indicate that an EFT payment would impose a hardship because of a mental impairment that prevents them from handling electronic payments or reside in a remote geographic location within the U.S., which lacks infrastructure to provide electronic payments, must apply with Treasury for an exemption.
  • Treasury will require the individual to sign a certification before a notary public and under the penalty of perjury.
  • NOTE: The term “geographic location” for the purpose of this policy refers to areas within the U.S. Foreign beneficiaries who refuse electronic payment are not required to apply for an exemption. See GN 02402.201B for more information concerning foreign beneficiaries
  • NOTE: Treasury is responsible for determining if an individual is eligible for an exemption. SSA is not responsible for the exemption determination or its development.
  • C. What is the Direct Deposit process?
  • For individuals who file for benefits on or after May 1, 2011 and do not allege one of the exemptions to the electronic payment requirement, take the following actions:
  • 1. Advise the individual of the electronic payment requirement,
  • 2. Indicate you must receive payment by direct deposit and discuss its advantages as stated in GN 02402.005G.
  • 3. If the individual does not have a bank account, discuss the Direct Express® debit card and its advantages as stated in GN 02402.007.
  • NOTE: SSA will not use a protective filing or development date solely to exempt a claim from the electronic payment requirement. Claims filed before May 1, 2011 will not be subject to the electronic payment requirement, regardless of when we adjudicate the claim.
  • 4. If the individual does not agree to electronic payment, tell the individual, “We will temporarily pay you by check and Treasury will contact you at a later time to discuss how you will receive your benefit payments in the future.”
  • 5. Currently entitled Title II beneficiaries and Title XVI recipients, who received their payments by check (prior to May 1, 2011), can continue to do so until March 1, 2013. However, by March 1, 2013, beneficiaries and recipients must select a form of electronic payment or apply for exemption. Treasury is responsible for reviewing the request and making a decision. Treasury will contact the individuals directly once they make a decision.
  • To maintain good public relations field offices (FOs)
  • * Maintain lists of financial institutions (FIs) in their area that offer low cost banking services;
  • * May prefer to maintain a list of all FIs in the area, the type of accounts they provide, and the approximate cost of the accounts;
  • * Advise the individual of the electronic payment (direct deposit) requirement.
  • * Inform the individual that he or she must receive payment by direct deposit, and discuss its advantages as stated in GN 02402.005G.
  • * If the individual does not have a bank account, discuss the Direct Express debit card and its advantages as stated in GN 02402.007. NOTE: Do not use a protective filing or development date solely to exempt a claim from the electronic payment requirement. Claims filed before May 1, 2011 are not subject to the electronic payment requirement, regardless of when we adjudicate the claim.
  • * If the individual does not agree to electronic payment, tell the individual, “We will temporarily pay you by check and Treasury will contact you at a later time to discuss how you will receive your benefit payments in the future.”
  • * As of March 1, 2013, Title II beneficiaries and Title XVI recipients must select a form of electronic payment or apply for exemption. Treasury is responsible for reviewing the request and making a determination. Treasury will contact the individuals directly once they make a determination.
  • To maintain good public relations field offices (FOs) must:
  • * Maintain lists of financial institutions (FIs) in their area that offer low cost banking services; or
  • * May prefer to maintain a list of all FIs in the area, with the type of accounts they provide, and the approximate cost of the accounts; or
  • * List FIs offering Electronic Transfer Accounts (ETA); and
  • * Update the lists every two years to ensure their accuracy.
  • D. References
  • * GN 02402.005, Direct Deposit Information for All Types of Interviews
  • * GN 02402.007, Direct Express®
  • * GN 02402.067, Electronic Transfer Accounts (ETA)
  • * GN 02402.201, Background and General Policy for Direct Deposit Outside the U.S.
  • D. Reference
  • GN 02402.067, Electronic Transfer Account (ETA)
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