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Sequestration's mandatory budget cuts are scheduled to take effect today. The press has reported that "Social Security will not be affected." This is not completely accurate... it’s plain false! It is true that the payment of benefits will not be affected. However, the sequestration cuts will affect all other aspects of SSA, including the day-to-day operations of the Agency, by reducing SSA's administrative budget.

This comes on top of a purposeful initiative by SSA to transform the agency into having as little direct public contact as possible, leaving all communication through mail, phone or web based activities. Michael J. Astrue, Commissioner of Social Security, announced a few months back that the agency was expanding the online services available that allowed the creation of a personalized online account that people can use beginning in their working years and continuing throughout the time they receive Social Security benefits. Existing Social Security beneficiaries and Supplemental Security Income (SSI) recipients could now access their benefit verification letter, payment history, and earnings record instantly using their online account. Social Security beneficiaries also can change their address and start or change direct deposit information online. However one does not need to add that this is a positive development for people who regularly have access to a computer, but with an estimated 45% of SSI recipients and more than a third of Social Security beneficiaries not having home internet access these services are meaningless!

Due to SSA’s shrinking operational budget even prior to sequestration, SSA office hours have been steadily cut. Most SSA offices are not only open 9am-3pm and either closed, or only open until noon on Wednesdays.

According to the SSA; their operations, field office and hearing office operations will be directly impacted by sequestration, although the timing is not clear. SSA estimated that this will result in longer waits in field offices (average of 60 minutes) and for the 800-number. Pending levels of initial disability claims would rise by over 140,000 claims and would have to wait about twelve weeks longer for an initial decision. Sequestration would result in the loss of over 5,000 more SSA employees.

At the hearing level, claimants will have to wait nearly a month longer for a hearing decision and the progress in reducing the hearings backlog would be eroded. While SSA will try to prioritize reductions to avoid furloughs, they still remain possible. With each furlough day, the Office of Disability Adjudication and Review would not be able to hold 3,000 hearings.

Just a reminder that effective today is also the deadline for individuals who continue to receive federal benefits (including SSDI and SSI) by check will have to provide the Treasury Department with information about a bank account for direct deposit of federal benefits.  If no information is provided about the bank account for electronic deposit, SSA will offer the Direct Express prepaid debit card for receipt of federal payments.The rule applies to SSI/SSDI recipients and their representative payees.

The debit card would be managed through a national private bank, where beneficiaries and recipients would be subject to standard bank fees;

ATM cash withdrawal, surcharge may apply
 $0.90 each withdrawal*

Monthly paper statement mailed to you
 $0.75 each month

Funds transfer to a personal U.S. bank account
 $1.50 each time

Card replacement
 $4 after one free each year

Overnight delivery of replacement card
 $13.50 each time

International ATM cash withdrawal currency conversion fee (3%) will be added
 $3 plus 3% each withdrawal

International transaction outside U.S. currency conversion fee (3%) will be added

One could question how this private bank landed such an exorbitant national contract managing the cash benefits of millions of beneficiaries, and thus making millions in profits off of fees collected from federal cash benefit payments... but that is another diary.

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