In an ultimate test for electronic benefit payments, the U.S. Social Security Administration, beginning in March, will switch entirely to direct deposits — a move that officials hope will benefit homeless and mentally ill people as well as others with disabilities.

About 90 percent of Californians receiving SSA benefits have switched from paper checks to direct deposits to banks or credit cards, federal officials said. There are, however, about 260,000 in the state who have not, and half of them may be homeless or disabled.

No specific number was available for Orange County beneficiaries who have yet to make the switch.

With the March 1 deadline looming for required direct deposits, SSA officials said they have devised a system to ensure access to benefits for the homeless or disabled, who historically have problems with loss or theft of identification, securing a bank account, maintaining a mail drop and obtaining ATM or credit cards.

In particular, federal officials have established an ATM-credit card called Direct Express exclusively for direct deposits of SSA benefits. The card does not require a bank account, largely is free of use charges and readily can be replaced if lost or stolen.

“I like it,” said Dwight Smith of the Orange County Catholic Worker, which runs Isaiah House in Santa Ana to aid the homeless and disabled. “We’ve been pushing for direct deposit for years. But there always were troublesome limitations.”

Safely securing such benefits has long been an issue for those living on the street or without a family or friend support network.

About a decade ago, a gang operated in Orange County staking out check-cashing storefronts, where they specialized in robbing single women cashing their SSA checks after receipt on particular days, Smith recalled.

“They also raped or assaulted some to traumatize them more,” he added.

The addresses of facilities like Isaiah House are often used by the homeless or disabled for delivery of SSA paper checks, Smith noted. It is not uncommon for some banks to charge account fees that are onerous for the challenged population, particularly penalties such as $35 for account overdrafts, he said.

With the Direct Express card, officials of the U.S. Treasury Department say there can be no overcharges because beneficiaries can  withdraw only what they have in the account and the account accepts only SSA deposits. There is one free replacement of the card each year, with unlimited additional replacements for $4. A replacement card can be ordered with a free phone call.

Nationally, 93 percent of SSA beneficiaries are using direct deposit, with at least half of the remaining 7 percent “challenging cases,” said Walt Henderson, director of Treasury Department’s program in Washinton, D.C.

“I think we have created a program that will work for this population,” said Henderson. “It is a lot safer than paper checks.”

Rex Dalton is a San Diego-based journalist who has worked for the San Diego Union-Tribune and the journal Nature. You can reach him directly at

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