Change is Coming
All Social Security Benefits to Go Electronic
By 2013, the checks will not be in the mail.
by: Carole Fleck | from: Bulletin | April 23, 2010
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EnlargeMillions of Social Security recipients who get their monthly checks by mail will instead receive them electronically as of March 1, 2013, the federal government has announced. The change will not affect about 85 percent of Social Security recipients, who already receive their payments electronically.
The switch is expected to save the federal government more than $300 million in mail and paper fees in the first five years. It will also cover veterans as well as railroad and federal civil service retirees.
The change from paper checks to electronic payments will begin earlier, on March 1, 2011, for new recipients who start collecting Social Security or other benefits as of that date.
Recipients who don’t have bank accounts will be able to enroll in the government’s Direct Express Debit MasterCard program. Prepaid debit cards will allow them to access their monthly payments.
AARP Executive Vice President Nancy LeaMond lauded the Obama administration for its efforts to increase efficiency, reduce the potential for fraud and abuse and save money.
“AARP appreciates the efforts initiated by the administration to modernize Social Security and other payment systems that millions of Americans rely on each and every day for their financial and retirement security,” she said.
She said in a statement that AARP will work closely with government officials to make sure that current and future recipients, including about 4 million people who don’t have bank accounts, are able to make the transition to receive their Social Security and other federal benefits electronically.
Carole Fleck is a senior editor at the AARP Bulletin.
Saturday, May 29, 2010
Tuesday, May 18, 2010
Social Security faces a projected $5.3 trillion shortfall over
May 17, 2010 (AP Online delivered by Newstex) -- Social Security faces a projected $5.3 trillion shortfall over the next 75 years. Options for improving the program's finances, with the percentage of the gap that would be eliminated:
--Immediately increase payroll taxes for workers and employers by 1.1 percentage points each, to 7.3 percent: 104 percent.
--Increase payroll taxes for workers and employers by 1 percentage point starting in 2022, and an additional percentage point starting in 2052: 103 percent.
--Increase payroll taxes for workers and employers by 1/20th of 1 percentage point each year for 20 years: 69 percent.
--Tax all wages including those above the current cap of $106,800, without providing additional benefits to high earners: 116 percent.
--Tax all wages including those above the current cap of $106,800, while providing increased benefits to high earners: 95 percent.
--Impose a new 5 percent tax on couples making more than $250,000 and individuals making more than $125,000: 62 percent.
--Reduce the annual cost-of-living increase in Social Security payments by 1 percentage point each year: 78 percent.
--Gradually increase the age when retirees qualify for full benefits from 67 to 68: 23 percent.
--Gradually increase the age when retirees qualify for full benefits from 67 to 70: 31 percent.
--Reduce Social Security payments by 5 percent for new beneficiaries in 2010 and later: 30 percent.
--__
Source: Senate Special Committee on Aging
Note: Social Security is financed by a 6.2 percent payroll tax on wages below $106,800 a year. Workers and employers each pay a 6.2 percent tax on employees' wages.
--Immediately increase payroll taxes for workers and employers by 1.1 percentage points each, to 7.3 percent: 104 percent.
--Increase payroll taxes for workers and employers by 1 percentage point starting in 2022, and an additional percentage point starting in 2052: 103 percent.
--Increase payroll taxes for workers and employers by 1/20th of 1 percentage point each year for 20 years: 69 percent.
--Tax all wages including those above the current cap of $106,800, without providing additional benefits to high earners: 116 percent.
--Tax all wages including those above the current cap of $106,800, while providing increased benefits to high earners: 95 percent.
--Impose a new 5 percent tax on couples making more than $250,000 and individuals making more than $125,000: 62 percent.
--Reduce the annual cost-of-living increase in Social Security payments by 1 percentage point each year: 78 percent.
--Gradually increase the age when retirees qualify for full benefits from 67 to 68: 23 percent.
--Gradually increase the age when retirees qualify for full benefits from 67 to 70: 31 percent.
--Reduce Social Security payments by 5 percent for new beneficiaries in 2010 and later: 30 percent.
--__
Source: Senate Special Committee on Aging
Note: Social Security is financed by a 6.2 percent payroll tax on wages below $106,800 a year. Workers and employers each pay a 6.2 percent tax on employees' wages.
Sunday, April 25, 2010
Social Security and other federal benefits payments will be made by direct deposit by 2013.
The Washington Post reports that most Social Security and other federal benefits payments will be made by direct deposit by 2013.
The decision will eliminate about 136 million paper checks sent by the Social Security Administration, Department of Veterans Affairs, Railroad Retirement Board and Office of Personnel Management.
The switch is part of a broader plan to shift away from paper-based payments and transactions, and it will require businesses using Federal Tax Deposit coupons to move to electronic tax payments. The Treasury also plans to cut the purchase of paper savings bonds through payroll sales. The plans should save taxpayers about $400 million in processing, postage and paper costs in the first five years.
Americans who enroll on or after March 1, 2011, for benefits payments will receive them by direct deposit or be enrolled in the government's Direct Express Debit MasterCard program if they do not provide bank account information. Beneficiaries now receiving payments will switch to direct deposit or the debit card by March 1, 2013, after agencies inform them of the changes, Treasury said.
Prior efforts at mandating direct payments have failed because the government had not established the debit card program for people who don't have bank accounts.
http://www.usdirectexpress.com/edcfdtclient/index.html
The Direct Express® card surcharge-free ATM network offers surcharge free ATM access at approximately 50,000 ATMs throughout the country including Comerica Bank, Charter One, Privileged Status, Alliance One, PNC Bank, MasterCard® ATM Alliance, and MoneyPass To find an ATM near you , please visit the Direct Express® card website at www.USDirectExpress.com or call the Customer Service Department toll free at 1 (888) 741-1115.
Even if you don't live near a Direct Express® card surcharge-free network ATM you can avoid fees by
Using your Direct Express® card at retail locations when you make purchases instead of getting cash at an ATM.
Getting cash back for free when you make purchases at many retail locations
Going to any bank or credit union that displays the MasterCard® acceptance mark and get cash from a teller free of charge.
It is important that you keep track of your deposits and how much you spend using your Direct Express® card. You can obtain balance information at no cost by calling the Direct Express® card Customer Service Department, 24 hours a day, 7 days a week, at 1 (888) 741-1115 (toll-free). You can view your account information at www.USDirectExpress.com or obtain balance information at any ATM that displays the MasterCard® acceptance mark, at no cost. You can also request free optional deposit notification and low balance alerts. For a monthly fee of $ .75, you may request that a monthly paper statement be mailed to you.
__._,_.___
The decision will eliminate about 136 million paper checks sent by the Social Security Administration, Department of Veterans Affairs, Railroad Retirement Board and Office of Personnel Management.
The switch is part of a broader plan to shift away from paper-based payments and transactions, and it will require businesses using Federal Tax Deposit coupons to move to electronic tax payments. The Treasury also plans to cut the purchase of paper savings bonds through payroll sales. The plans should save taxpayers about $400 million in processing, postage and paper costs in the first five years.
Americans who enroll on or after March 1, 2011, for benefits payments will receive them by direct deposit or be enrolled in the government's Direct Express Debit MasterCard program if they do not provide bank account information. Beneficiaries now receiving payments will switch to direct deposit or the debit card by March 1, 2013, after agencies inform them of the changes, Treasury said.
Prior efforts at mandating direct payments have failed because the government had not established the debit card program for people who don't have bank accounts.
http://www.usdirectexpress.com/edcfdtclient/index.html
The Direct Express® card surcharge-free ATM network offers surcharge free ATM access at approximately 50,000 ATMs throughout the country including Comerica Bank, Charter One, Privileged Status, Alliance One, PNC Bank, MasterCard® ATM Alliance, and MoneyPass To find an ATM near you , please visit the Direct Express® card website at www.USDirectExpress.com or call the Customer Service Department toll free at 1 (888) 741-1115.
Even if you don't live near a Direct Express® card surcharge-free network ATM you can avoid fees by
Using your Direct Express® card at retail locations when you make purchases instead of getting cash at an ATM.
Getting cash back for free when you make purchases at many retail locations
Going to any bank or credit union that displays the MasterCard® acceptance mark and get cash from a teller free of charge.
It is important that you keep track of your deposits and how much you spend using your Direct Express® card. You can obtain balance information at no cost by calling the Direct Express® card Customer Service Department, 24 hours a day, 7 days a week, at 1 (888) 741-1115 (toll-free). You can view your account information at www.USDirectExpress.com or obtain balance information at any ATM that displays the MasterCard® acceptance mark, at no cost. You can also request free optional deposit notification and low balance alerts. For a monthly fee of $ .75, you may request that a monthly paper statement be mailed to you.
__._,_.___
Wednesday, September 9, 2009
NO COLA 2010 2011
Millions face shrinking Social Security payments (Associated Press)
By STEPHEN OHLEMACHER
August 24, 2009
WASHINGTON (AP) -- Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise.
The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975.
By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.
``I will promise you, they count on that COLA,'' said Barbara Kennelly, a former Democratic congresswoman from Connecticut who now heads the National Committee to Preserve Social Security and Medicare. ``To some people, it might not be a big deal. But to seniors, especially with their health care costs, it is a big deal.''
Cost of living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels.
Advocates say older people still face higher prices because they spend a disproportionate amount of their income on health care, where costs rise faster than inflation. Many also have suffered from declining home values and shrinking stock portfolios just as they are relying on those assets for income.
``For many elderly, they don't feel that inflation is low because their expenses are still going up,'' said David Certner, legislative policy director for AARP. ``Anyone who has savings and investments has seen some serious losses.''
About 50 million retired and disabled Americans receive Social Security benefits. The average monthly benefit for retirees is $1,153 this year. All beneficiaries received a 5.8 percent increase in January, the largest since 1982.
More than 32 million people are in the Medicare prescription drug program. Average monthly premiums are set to go from $28 this year to $30 next year, though they vary by plan. About 6 million people in the program have premiums deducted from their monthly Social Security payments, according to the Social Security Administration.
Millions of people with Medicare Part B coverage for doctors' visits also have their premiums deducted from Social Security payments. Part B premiums are expected to rise as well. But under the law, the increase cannot be larger than the increase in Social Security benefits for most recipients.
There is no such hold-harmless provision for drug premiums.
Kennelly's group wants Congress to increase Social Security benefits next year, even though the formula doesn't call for it. She would like to see either a 1 percent increase in monthly payments or a one-time payment of $150.
The cost of a one-time payment, a little less than $8 billion, could be covered by increasing the amount of income subjected to Social Security taxes, Kennelly said. Workers only pay Social Security taxes on the first $106,800 of income, a limit that rises each year with the average national wage.
But the limit only increases if monthly benefits increase.
Critics argue that Social Security recipients shouldn't get an increase when inflation is negative. They note that recipients got a big increase in January _ after energy prices had started to fall. They also note that Social Security recipients received one-time $250 payments in the spring as part of the government's economic stimulus package.
Consumer prices are down from 2008 levels, giving Social Security recipients more purchasing power, even if their benefits stay the same, said Andrew G. Biggs, a resident scholar at the American Enterprise Institute, a Washington think tank.
``Seniors may perceive that they are being hurt because there is no COLA, but they are in fact not getting hurt,'' Biggs said. ``Congress has to be able to tell people they are not getting everything they want.''
Social Security is also facing long-term financial problems. The retirement program is projected to start paying out more money than it receives in 2016. Without changes, the retirement fund will be depleted in 2037, according to the Social Security trustees' annual report this year.
President Barack Obama has said he would like to tackle Social Security next year, after Congress finishes work on health care, climate change and new financial regulations.
Lawmakers are preoccupied by health care, making it difficult to address other tough issues. Advocates for older people hope their efforts will get a boost in October, when the Social Security Administration officially announces that there will not be an increase in benefits next year.
``I think a lot of seniors do not know what's coming down the pike, and I believe that when they hear that, they're going to be upset,'' said Sen. Bernie Sanders, an independent from Vermont who is working on a proposal for one-time payments for Social Security recipients.
``It is my view that seniors are going to need help this year, and it would not be acceptable for Congress to simply turn its back,'' he said.
By STEPHEN OHLEMACHER
August 24, 2009
WASHINGTON (AP) -- Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise.
The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975.
By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.
``I will promise you, they count on that COLA,'' said Barbara Kennelly, a former Democratic congresswoman from Connecticut who now heads the National Committee to Preserve Social Security and Medicare. ``To some people, it might not be a big deal. But to seniors, especially with their health care costs, it is a big deal.''
Cost of living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels.
Advocates say older people still face higher prices because they spend a disproportionate amount of their income on health care, where costs rise faster than inflation. Many also have suffered from declining home values and shrinking stock portfolios just as they are relying on those assets for income.
``For many elderly, they don't feel that inflation is low because their expenses are still going up,'' said David Certner, legislative policy director for AARP. ``Anyone who has savings and investments has seen some serious losses.''
About 50 million retired and disabled Americans receive Social Security benefits. The average monthly benefit for retirees is $1,153 this year. All beneficiaries received a 5.8 percent increase in January, the largest since 1982.
More than 32 million people are in the Medicare prescription drug program. Average monthly premiums are set to go from $28 this year to $30 next year, though they vary by plan. About 6 million people in the program have premiums deducted from their monthly Social Security payments, according to the Social Security Administration.
Millions of people with Medicare Part B coverage for doctors' visits also have their premiums deducted from Social Security payments. Part B premiums are expected to rise as well. But under the law, the increase cannot be larger than the increase in Social Security benefits for most recipients.
There is no such hold-harmless provision for drug premiums.
Kennelly's group wants Congress to increase Social Security benefits next year, even though the formula doesn't call for it. She would like to see either a 1 percent increase in monthly payments or a one-time payment of $150.
The cost of a one-time payment, a little less than $8 billion, could be covered by increasing the amount of income subjected to Social Security taxes, Kennelly said. Workers only pay Social Security taxes on the first $106,800 of income, a limit that rises each year with the average national wage.
But the limit only increases if monthly benefits increase.
Critics argue that Social Security recipients shouldn't get an increase when inflation is negative. They note that recipients got a big increase in January _ after energy prices had started to fall. They also note that Social Security recipients received one-time $250 payments in the spring as part of the government's economic stimulus package.
Consumer prices are down from 2008 levels, giving Social Security recipients more purchasing power, even if their benefits stay the same, said Andrew G. Biggs, a resident scholar at the American Enterprise Institute, a Washington think tank.
``Seniors may perceive that they are being hurt because there is no COLA, but they are in fact not getting hurt,'' Biggs said. ``Congress has to be able to tell people they are not getting everything they want.''
Social Security is also facing long-term financial problems. The retirement program is projected to start paying out more money than it receives in 2016. Without changes, the retirement fund will be depleted in 2037, according to the Social Security trustees' annual report this year.
President Barack Obama has said he would like to tackle Social Security next year, after Congress finishes work on health care, climate change and new financial regulations.
Lawmakers are preoccupied by health care, making it difficult to address other tough issues. Advocates for older people hope their efforts will get a boost in October, when the Social Security Administration officially announces that there will not be an increase in benefits next year.
``I think a lot of seniors do not know what's coming down the pike, and I believe that when they hear that, they're going to be upset,'' said Sen. Bernie Sanders, an independent from Vermont who is working on a proposal for one-time payments for Social Security recipients.
``It is my view that seniors are going to need help this year, and it would not be acceptable for Congress to simply turn its back,'' he said.
Monday, September 7, 2009
Cola no cost of living Increase
We also need an absolute commitment to social security -- more funding and yes, more generous benefits. This year, because of temporary deflation, Social Security recipients got no cost of living increase. But energy prices have been volatile. Health costs have risen. The costs of local services have gone up as city an state governments have had to raises fees sales taxes to plug budget holes... Living in 2009 really isn't cheaper than living in 2008 and the government knows it.
Thursday, October 16, 2008
WASHINGTON - Social Security benefits for 50 million people will go up 5.8 percent next year, the largest increase in more than a quarter century. The increase, which will start in January, was announced Thursday by the Social Security Administration. It will mean an additional $63 per month for the average retiree.
It's the largest increase since a 7.4 percent jump in 1982 and is more than double the 2.3 percent rise that retirees got in their monthly checks starting in January of this year.
The typical retiree's monthly check will go from $1,090 currently to $1,153.
The increase would have been even higher, but after racing ahead earlier in the year, energy costs fell in both August and September, helping to moderate the overall price gain.
The 5.8 percent rise in the cost of living adjustment is a sharp departure from recent years. The COLA increases have been below 3 percent for all but three of the past 15 years as the Federal Reserve waged a successful campaign to keep inflation under control.
Even with the big increase, the COLA is well below the gains of the late 1970s and early 1980s when the country was in the grips of a decade-long bout of high inflation. The biggest cost of living benefit on record was a 14.3 percent increase in 1980. Social Security benefits have been adjusted every year since 1975.
In one break for most retirees, the cost of living increase will not be eaten up by higher monthly premiums for the part of Medicare that pays for physician services. Because of gains in the Medicare Part B trust fund, that premium will hold steady at $96.40 a month, although higher-income people including couples making more than $170,000 annually will see their premiums increase.
Next year's cost of living increase will go to more than 55 million Americans. More than 50 million receive Social Security benefits while the rest get Supplemental Security Income payments for the poor.
The average couple, both getting Social Security benefits, will see their monthly check go up by $103 a month to $1,876.
The standard Supplemental Security Income payment for a couple will go from $956 per month to $1,011. The SSI payment for an individual will go from $637 per month to $674 per month.
The average monthly check for a disabled worker will go from $1,006 to $1,064
In addition to the cost of living adjustment, the government announced Thursday that the maximum amount of earnings subject to the Social Security tax will increase next year to $106,800, up from $102,000 this year.
It's the largest increase since a 7.4 percent jump in 1982 and is more than double the 2.3 percent rise that retirees got in their monthly checks starting in January of this year.
The typical retiree's monthly check will go from $1,090 currently to $1,153.
The increase would have been even higher, but after racing ahead earlier in the year, energy costs fell in both August and September, helping to moderate the overall price gain.
The 5.8 percent rise in the cost of living adjustment is a sharp departure from recent years. The COLA increases have been below 3 percent for all but three of the past 15 years as the Federal Reserve waged a successful campaign to keep inflation under control.
Even with the big increase, the COLA is well below the gains of the late 1970s and early 1980s when the country was in the grips of a decade-long bout of high inflation. The biggest cost of living benefit on record was a 14.3 percent increase in 1980. Social Security benefits have been adjusted every year since 1975.
In one break for most retirees, the cost of living increase will not be eaten up by higher monthly premiums for the part of Medicare that pays for physician services. Because of gains in the Medicare Part B trust fund, that premium will hold steady at $96.40 a month, although higher-income people including couples making more than $170,000 annually will see their premiums increase.
Next year's cost of living increase will go to more than 55 million Americans. More than 50 million receive Social Security benefits while the rest get Supplemental Security Income payments for the poor.
The average couple, both getting Social Security benefits, will see their monthly check go up by $103 a month to $1,876.
The standard Supplemental Security Income payment for a couple will go from $956 per month to $1,011. The SSI payment for an individual will go from $637 per month to $674 per month.
The average monthly check for a disabled worker will go from $1,006 to $1,064
In addition to the cost of living adjustment, the government announced Thursday that the maximum amount of earnings subject to the Social Security tax will increase next year to $106,800, up from $102,000 this year.
Saturday, October 4, 2008
KOHL-MCCASKILL BILL SPURS GOVERNMENT TO RESOLVE ISSUE OF ILLEGAL GARNISHMENT OF SS BENEFITS
KOHL-MCCASKILL BILL SPURS GOVERNMENT TO RESOLVE ISSUE OF ILLEGAL GARNISHMENT OF SS BENEFITS
Contact: Ashley Glacel - (202) 224-5364
Monday, April 14, 2008
WASHINGTON, D.C. – Today U.S. Senators Herb Kohl (D-WI), Chairman of the Senate Special Committee on Aging, and Claire McCaskill (D-MO) introduced the Illegal Garnishment Prevention Act, a bill that would prevent the U.S. Department of Treasury from promoting the use of direct deposit for Social Security beneficiaries until they put a stop to the illegal garnishment of government benefits from the bank accounts of private citizens. With increasing frequency, financial institutions are garnishing or freezing funds on behalf of creditors from bank accounts into which Social Security, Supplemental Security Income (SSI), and Veterans benefits are electronically deposited, despite clear protections in federal law against the garnishment of such benefits.
“Millions of seniors rely on their Social Security benefits as their only source of income for basic needs like housing and food. When financial institutions and creditors illegally withhold these benefit checks, they are putting the lives of our most vulnerable segment of the population at risk. We need to know how wide-spread this practice has become and find a way to make it stop,” Kohl said.
“For many seniors and disabled Americans, social security checks keep them financially afloat from month to month. When banks garnish these funds, they are left with nothing. We need to be very careful to make sure proper safeguards are in place to protect seniors in this situation, and this bill will guarantee they are” McCaskill said.
In most cases, the protected funds are taken not only by the creditor, but also by the bank through the collection of additional fees levied for “processing” the garnishment. These can include overdraft charges or insufficient fund charges, which occur as the result of the garnishment. Some banks have also been found to dip into these protected funds to cover other debts owed to the bank, such as a car loan. Many older Americans rely on Social Security benefits to pay their rent, buy groceries, and afford prescription drugs. For twenty percent of seniors over 65 years old, Social Security is their only source of income and for two-thirds it is the major source of income.
In August 2007, Kohl, McCaskill, and Senator Max Baucus (D-MT) sent a letter to the Social Security Administration’s Inspector General asking him to investigate the increasingly frequent but prohibited method of collecting debt from senior citizens, veterans, and the disabled. The senators requested that the Social Security Administration's Inspector General report to them the degree to which large and small banks are engaged in these practices and the extent to which the resulting fees are eating up the safety net funds upon which seniors, veterans and the disabled rely. It is anticipated that the results of the SSA OIG’s investigation will be released in coming weeks.
“In recent months several newspapers have published articles describing how financial institutions have been freezing and assessing fees on accounts in which Social Security and Veterans' benefits are electronically deposited,” the letter read. “Sadly, the majority of the individuals to whom this is occurring are those who can least afford it.”
In November 2007, Senators Kohl, McCaskill, and Baucus were joined by Senators Chuck Grassley (R-IA), Gordon H. Smith (R-OR), Christopher Dodd (D-CT), Richard Shelby (R-AL), and John Kerry (D-MA) in urging the Director of the Office of Management and Budget, Jim Nussle, to play a role in resolving the matter. The letter requested that Director Nussle implore one or more of the five federal agencies with jurisdiction over America’s financial institutions to issue a necessary rule clarification.
# # #
A link to the August 2007 letter to the SSA OIG can be found here:
http://www.aging.senate.gov/letters/ssgarnishmentssaoig.pdf
A link to the November 2007 letter to the OMB can be found here:
http://www.aging.senate.gov/letters/ssgarnishmentomb.pdf
Contact: Ashley Glacel - (202) 224-5364
Monday, April 14, 2008
WASHINGTON, D.C. – Today U.S. Senators Herb Kohl (D-WI), Chairman of the Senate Special Committee on Aging, and Claire McCaskill (D-MO) introduced the Illegal Garnishment Prevention Act, a bill that would prevent the U.S. Department of Treasury from promoting the use of direct deposit for Social Security beneficiaries until they put a stop to the illegal garnishment of government benefits from the bank accounts of private citizens. With increasing frequency, financial institutions are garnishing or freezing funds on behalf of creditors from bank accounts into which Social Security, Supplemental Security Income (SSI), and Veterans benefits are electronically deposited, despite clear protections in federal law against the garnishment of such benefits.
“Millions of seniors rely on their Social Security benefits as their only source of income for basic needs like housing and food. When financial institutions and creditors illegally withhold these benefit checks, they are putting the lives of our most vulnerable segment of the population at risk. We need to know how wide-spread this practice has become and find a way to make it stop,” Kohl said.
“For many seniors and disabled Americans, social security checks keep them financially afloat from month to month. When banks garnish these funds, they are left with nothing. We need to be very careful to make sure proper safeguards are in place to protect seniors in this situation, and this bill will guarantee they are” McCaskill said.
In most cases, the protected funds are taken not only by the creditor, but also by the bank through the collection of additional fees levied for “processing” the garnishment. These can include overdraft charges or insufficient fund charges, which occur as the result of the garnishment. Some banks have also been found to dip into these protected funds to cover other debts owed to the bank, such as a car loan. Many older Americans rely on Social Security benefits to pay their rent, buy groceries, and afford prescription drugs. For twenty percent of seniors over 65 years old, Social Security is their only source of income and for two-thirds it is the major source of income.
In August 2007, Kohl, McCaskill, and Senator Max Baucus (D-MT) sent a letter to the Social Security Administration’s Inspector General asking him to investigate the increasingly frequent but prohibited method of collecting debt from senior citizens, veterans, and the disabled. The senators requested that the Social Security Administration's Inspector General report to them the degree to which large and small banks are engaged in these practices and the extent to which the resulting fees are eating up the safety net funds upon which seniors, veterans and the disabled rely. It is anticipated that the results of the SSA OIG’s investigation will be released in coming weeks.
“In recent months several newspapers have published articles describing how financial institutions have been freezing and assessing fees on accounts in which Social Security and Veterans' benefits are electronically deposited,” the letter read. “Sadly, the majority of the individuals to whom this is occurring are those who can least afford it.”
In November 2007, Senators Kohl, McCaskill, and Baucus were joined by Senators Chuck Grassley (R-IA), Gordon H. Smith (R-OR), Christopher Dodd (D-CT), Richard Shelby (R-AL), and John Kerry (D-MA) in urging the Director of the Office of Management and Budget, Jim Nussle, to play a role in resolving the matter. The letter requested that Director Nussle implore one or more of the five federal agencies with jurisdiction over America’s financial institutions to issue a necessary rule clarification.
# # #
A link to the August 2007 letter to the SSA OIG can be found here:
http://www.aging.senate.gov/letters/ssgarnishmentssaoig.pdf
A link to the November 2007 letter to the OMB can be found here:
http://www.aging.senate.gov/letters/ssgarnishmentomb.pdf
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