The Medicare Part D late enrollment premium penalty (LEP) is an additional cost you will pay every month because you did not enroll into a Medicare Part D prescription drug plan when you were initially eligible
for Medicare coverage - or you were without Medicare drug coverage for a period of more than 63 days - and you did not have any other creditable prescription coverage
(drug coverage that was at least as comprehensive as Medicare Part D drug coverage, such as VA drug coverage, TRICARE, or
employer healthcare benefits).
Calculating your Late Enrollment Penalty (LEP)
The Late Enrollment Penalty is calculated as an
additional 1% of the average annual base Medicare Part D premium (for example, $34.70 in 2024
up from $32.74 in 2023
) for every month that
you were without creditable coverage (in other words, you will pay roughly, a $0.35 penalty for every month without drug coverage).
The Centers for Medicare and Medicaid Services (CMS) will
calculate your Part D Late Enrollment Penalty by totaling the number of
months you have been without "creditable" prescription drug coverage and
multiplying the total months by 1% of the national base average
Medicare Part D premium (this changes each year).
For example, if you were without drug coverage for 10 months, in 2024 you would pay 10 months * 1% * $34.70 = around $3.50 per month that is paid in addition to your Medicare Part D premium.
The good news is that you do not need to calculate your Medicare Part D late enrollment premium penalty each year. Your penalty is calculated for you by Medicare each year and then reported to your Medicare Part D plan or Medicare Advantage plan. Your
Medicare Part D plan will then send you a letter regarding the amount of
Please note, your Medicare Part D LEP is permanent.
As reference, here are the national base average Medicare Part D premium values
used by CMS to calculate the late enrollment penalties for past years:
And here are a few articles detailing how the late enrollment penalty changes each year.
Exception to the LEP: The Medicare Part D Extra Help program
Please note, if you are eligible for Medicare Part D Extra Help (also
known as the Low-Income Subsidy (LIS) program), you will not be subject
to a late enrollment penalty - if you qualify for Medicare and Medicaid,
you automatically qualify for the Medicare Part D Extra Help program.
Example: How do I estimate my 55 month late-enrollment penalty
As shown in the table above, the 2024 national base Medicare Part D
premium is $34.70. So, if you were previously without creditable
prescription drug coverage for 55 months, you would pay your monthly
Medicare plan premium, plus you would pay a 2024 monthly penalty of $19.10
(55 months without drug coverage * 1% of $34.70 - rounded to the nearest $0.10) or around an additional $229
per year for your drug coverage.
If you stayed in a Medicare Part D plan, here is a chart of how your
55-month late-enrollment penalty would have changed over the years.
The ever-increasing "cost of waiting" to enroll in a Medicare Part D plan.
The following "maximum penalty" chart emphasizes the possible costs you
may incur if you do not have any other prescription drug coverage and
delay enrollment your Medicare Part D plan.
Aside from the late-enrollment penalty, if you decide to postpone
Medicare Part D enrollment and then find that you suddenly have
prescription needs, you may need to wait
until the annual Open Enrollment Period (starting October 15th and
continuing through December 7th) to join a plan with coverage starting
the next January 1st - and you will need to pay all of your prescription
costs out-of-pocket until your Part D plan coverage starts.
Our suggestion - avoid the penalty:
Even if you currently use no
prescription medications and are in good health, look at the monthly
costs on our chart and consider enrolling in a Medicare Part D plan or
Medicare Advantage plan with the lowest monthly premium (perhaps a
Medicare Advantage plan that offers prescription drug coverage (MAPD)
with a $0 premium). And then just consider your Medicare Part D plan as
other type of "insurance" that is available should you need it.
Appealing your late enrollment penalty
If you do not agree with your late enrollment penalty, you have the right to appeal
LEP. When your Medicare Part D plan informs you about your penalty, you
will also be told how you can appeal the penalty if it was wrongly
assessed. You can also learn more about LEP appeals by calling the
Services department of your Medicare Part D plan or you can read more
And to learn more about the Late-Enrollment Penalty
For more information, you can click here if you would like to read more
on the Medicare Part D late-enrollment penalty.
Also, you can learn more in our articles about the Late Enrollment Penalty (LEP)