Late Enrollment Penalty
What Is the Part D Late Enrollment Penalty?
The late enrollment penalty is an amount added to your Part D premium. You may owe a late enrollment penalty if, at any time after your initial enrollment period is over, there is a period of 63 or more days in a row when you do not have Part D or other creditable prescription drug coverage.
Note: If you get Extra Help, you don’t pay a late enrollment penalty.
3 Ways to Avoid the Late Enrollment Penalty
- Join a Medicare plan when you’re first eligible. You won’t have to pay a penalty, even if you’ve never had prescription drug coverage before.
- Don’t go 63 days or more in a row without a Medicare drug plan or other creditable coverage. Creditable prescription drug coverage could include drug coverage from a current or former employer or union, TRICARE, Indian Health Service, the Department of Veterans Affairs, or other health insurance coverage. Your plan must tell you each year if your drug coverage is creditable coverage. You may get this information in a letter or in a newsletter from the plan. Keep this information, because you may need it if you join a Medicare drug plan later.
- Tell your plan about any drug coverage you had if they ask about it. When you join a Medicare drug plan, the plan will send you a letter if it believes you went at least 63 days in a row without other creditable prescription drug coverage. The letter will include a form asking about any drug coverage you had. Complete the form and return it to your drug plan by the deadline in the letter. If you do not tell the plan about your creditable drug coverage, you may have to pay a penalty.
How much is the Penalty?
The cost of the late enrollment penalty depends on how long you went without creditable prescription drug coverage.
The late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($32.34 in 2011) times the number of full, uncovered months you were eligible but didn’t join a Medicare drug plan and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium.
The national base beneficiary premium may increase each year, so the penalty amount may also increase every year.