This week, a U.S. Treasury Department initiative expected to save more than $1 billion over the next 10 years alone begins to affect new recipients of Social Security Disability (SSD) benefits. This means that anyone approved for disability benefits on or after this Thursday (March 1) will receive their monthly payments via direct deposit into a bank account or through a Treasury-issued debit card.

While electronic funds transfers are normally the safest, cheapest and most convenient way to move money from one place to another for all concerned, the Social Security Administration (SSA) “going green” this week could soon leave the hundreds of thousands of disabled American parents who owe child support debts with no green at all.

Previously, the federal government allowed states seeking child support reimbursement to garnish no more than 65 percent of a person’s Social Security Disability benefits before a payment was mailed out. The new system, however, will allow states to collect 100 percent of each check. Because states have long had the power to freeze bank accounts when attempting to collect past due child support, benefit recipients have relied on paper checks as a way to ensure that they still received at least a portion of their benefits. That will no longer be possible under the new electronic payment system.

Speaking anonymously, Treasury officials say that the federal agency understands the problem but believes it is unavoidable in light of available alternatives.

The National Consumer Law Center and dozens of other groups sent a letter last week to the head of the SSA asking that he withdraw his support for the new rule requiring electronic payment of disability benefits. A final version of the new rule is currently being reviewed by the White House, which has not responded to requests for comment.

Source: USA Today, “Rule could leave poor, delinquent dads with no income,” Feb. 27, 2012