The paper unemployment check will soon be a thing of the past for Maryland residents who file for the insurance benefit starting today.
In its place comes plastic. The state's Department of Labor, Licensing and Regulation will issue prepaid debit cards to people seeking unemployment insurance benefits and forgo the use of paper checks for new applicants.
Department officials said the switch to plastic will save taxpayers about $400,000 annually in postage, paper, staff time and other processing costs.
"Anybody who has their paycheck electronically deposited in their bank account will appreciate the convenience of this feature," Secretary Thomas E. Perez said. "We're moving from the antiquated system of paper checks, with all the time delays and theft potential it had, to the 21st-century model of technological innovation."
Perez said the agency hopes the card will help people who rely on check-cashing services avoid paying costly fees. The biweekly payment is available immediately on the card, whereas check deposits can take up to three days to clear into a person's bank account, he said.
According to the Department of Labor, Licensing and Regulation, about 1 million checks per year are issued to Marylanders who file for unemployment benefits. People who were receiving unemployment benefits before today will continue to receive paper checks and will not have an option to receive the debit cards.
The change in how Marylanders will receive payments comes as the state has seen a spike in its unemployment rate. According to state figures, Maryland's jobless rate is 4.9 percent, or 146,232 people - an increase of 1 percentage point since January and the highest rate in 12 years.
At present, about 52,000 people in Maryland are receiving unemployment benefits, according to Dori Berman, a labor department spokeswoman.
The state contracted with Citigroup's "prepaid services" division to provide the cards and manage the program. Perez said the state put out a request for proposals, and at least four companies responded.
Users of the card will be able to manage the unemployment funds they receive by going to www.mduibenefits.com and logging in to the secure network. They will be able to set up a direct transfer from their unemployment funds account to a bank account, state officials said.
People can also use the card at ATMs to withdraw cash or at stores that accept Visa.
In any given month, users won't be charged fees if they make four or fewer cash withdrawals at Citibank branches, 7-Eleven and Publix stores, and from machines in the MoneyPass and Allpoint ATM networks. Using the card for purchases is also fee-free wherever Visa cards are accepted.
State officials cautioned that the card that does not extend any type of credit line and won't work if used without enough funds on the card.
"There is no possibility for overdraft," Perez said.
The card has a two-year expiration period, meaning that a person who stops and then restarts unemployment benefits can use the same card during that period.
Mark Harrington, a marketing director at Citigroup's prepaid services division, said the company expects to make money by taking a percentage of the fees that retailers have to pay Visa whenever a consumer uses a debit card on their electronic network.
"It doesn't cost the state anything," he said.