The Federal Laws Protecting Social Security Benefits

Retirees, disabled workers, surviving spouses and their dependents are entitled to monthly Social Security benefits. Because the intent of Social Security income is to supplement rather than replace lost wages, the amount you get each month is generally not enough to support all of your living expenses. The federal government recognizes this fact and as a result has, over time, enacted a series of laws designed to protect Social Security benefits and keep monthly payments intact.

Beneficiary Protection

Enacted on March 2, 2004, HR743 -- the Social Security Act of 2004 -- focuses on protecting the Social Security benefits of minor children and legally incompetent adults who have representative payees. The law defines a representative payee as a person the Social Security Administration appoints or approves to receive and manage monthly benefits. The bill states that representative payees may only use benefits to pay current maintenance needs, such as food, clothing and medical care of the recipient. The payee must deposit in a savings account or invest any benefits remaining at the end of the month. To ensure compliance, the agency requires representative payees to submit a yearly Representatives Payee Report, along with proper documentation to show how the money was spent or invested during the previous year.

Garnishment Protection

Section 207 of the Social Security Act, enacted August 10, 1939, protects benefits, with some exceptions, from assignment, levy, or garnishment. Five exceptions to Section 207 include garnishment to enforce a child support or alimony order, garnishment for past due federal taxes, an agreement between the IRS and recipient to withhold a portion of benefits to pay current federal income tax, garnishment to pay a past-due debt to any federal agency and permission for the IRS to garnish up to 15 percent of monthly benefits to satisfy a past-due federal tax debt.

U.S. Treasury Protections

Effective May 1, 2011, the U.S. Treasury Department began a phase-out of paper checks in favor of direct electronic deposits, and on March 1, 2013, discontinued issuing paper checks completely. Switching to electronic deposits significantly reduces the risk of fraud associated with lost or stolen benefit checks. An alternative to direct deposit to a bank account is to receive a Direct Express debit card. Because this card requires the use of a personal identification number and is insured by the FDIC, using it protects Social Security benefits as well as having a bank account.

Frozen Funds Protection

The switch to electronic-only deposits also brought with it an update to Section 207 of the Social Security Act. Prior to May 1, 2011, if your bank received an order of garnishment, it would generally freeze all the money in your bank account, including Social Security benefits on deposit at the time -- whether or not they could be subject to garnishment. However, starting on May 1, 2011, if your bank receives a garnishment order, they must verify whether any money in the account represents direct deposit Social Security benefits. If so, the bank must set aside two months’ worth of benefit payments and leave them accessible to you.