If you did not enroll into a Medicare Part D prescription drug plan during your
Initial Enrollment Period (IEP)
and you did not have other creditable prescription drug coverage
(like VA benefits or employer healthcare benefits), you could be subject to a penalty that is added to your monthly Medicare Part D premiums should you ever decide to join a Medicare drug plan in the future.
The Medicare Part D late-enrollment premium penalty is calculated as a premium increase
of 1% of the annual base Part D premium (for example, $32.74 in 2023
for every month you have been without creditable drug coverage - so each month without drug coverage accumulates a 2023 penalty of 1 month * 1% * $32.74 = $0.33.
The Medicare Part D penalty is permanent
and will fluctuate every year
based on the national average base Medicare Part D
The exact amount of the Part D late-enrollment premium penalty is re-calculated each year
by the Centers for Medicare and Medicaid Services (CMS) and then reported by CMS to your
Part D plan. Your Medicare Part D plan will then send you a letter regarding the
amount of your penalty. The letter from your Part D plan will also detail how the
penalty was calculated and explains how you can ask for a review of your
Late Enrollment Penalty (or LEP).
Click here for a few more details on the late enrollment penalty
Example Penalty Calculation
If you turned 65 (or became eligible for Medicare) in January 10, 2018, your
Medicare Part D Initial Enrollment Period (IEP) would extend 3 months beyond your birthday month or
until April 2018. This means that, if you do not enroll in a Medicare Part D plan during
the Initial Enrollment Period, your penalty would start accumulating in May 2018 and continue
until you actually join a Medicare Part D plan or obtain some other form of creditable prescription
drug coverage (or are exempt due to your low income status, such as qualifying for Medicaid or the Medicare Part D Extra Help
To continue with the example, if you never had Medicare Part D coverage - and were first eligible
for Medicare on January 10, 2018 - and you enroll in a 2022 Medicare Part D plan starting
January 1, 2022, your 2023 late-enrollment penalty may be as high as $14.40 per month paid in addition
to your monthly Medicare Part D premium
(May 2018 through December 2021 = 44 months * 1% of $32.74, the 2023 base Medicare Part D premium
Question: I enrolled in a Part D drug plan when I was first eligible for Medicare, but then cancelled my drug plan. Would I have a penalty if I decide to rejoin a Medicare drug plan in the future?
. If you canceled your Medicare Part D plan or were without creditable prescription
drug coverage for more than 63 days, you also may be subject to the late-enrollment penalty - should you ever decide to join a Medicare drug plan in the future - and you don't have any other creditable drug coverage - and you are not eligible for the Medicare Part D Extra Help
For a further explanation of the late-enrollment penalty, please see our Frequently Asked Question:
How do I calculate my Medicare Part D Late-Enrollment Penalty?
If you wish to see a few examples of how to calculate a late enrollment penalty you can
click here for the CMS Tip Sheet on Calculating the Late Enrollment Penalty
or see our most recent articles on the Late-Enrollment Premium Penalty: https://q1medicare.com/news/category/ Late-Enrollment-Penalty/11
Appealing the late-enrollment penalty
Please note: In certain situations, you can appeal your late-enrollment penalty
No penalty for Extra Help eligible Medicare beneficiaries
Remember, not everyone is subject to the late-enrollment penalty. CMS provides that there will be no late-enrollment penalty "for any beneficiary eligible for the low income subsidy
" or Extra Help program.
Question: Any chance of repealing the Medicare Part D late-enrollment penalty?
Back in 2005 and 2006, some people thought that the Medicare Pare D late-enrollment premium penalty would go away or would not be enforced or be repealed as unfair to seniors who had not learned about the Medicare Part D program.
Unfortunately, the late-enrollment penalty did not go away
and some Medicare beneficiaries who did not join a Medicare Part D plan
when they were first eligible or who were without creditable
prescription coverage for more than 63 days are now beginning to join
Medicare Part D plans, and then receiving letters from their new Part D plans
about how their penalty will increase (or more than double) their monthly premiums.