In 2016, the average monthly Medicare Part D base premium used to calculate the late-enrollment penalty will be $34.10
, a 3% increase over the 2015 base premium of $33.13
How is the late-enrollment penalty calculated?
The late-enrollment premium penalty is an additional monthly cost paid by Medicare Part D beneficiaries who did not enroll in a Medicare Part D prescription drug plan when they were first eligible or who were without creditable prescription drug coverage for more than 63 days.
"Creditable" drug coverage is any prescription coverage that
is at least as good as Medicare Part D prescription drug coverage, such as such
as VA drug coverage or employer coverage.
If you are subject to a late-enrollment penalty, you will pay your plan’s monthly Medicare Part D premium along with an additional penalty calculated as one percent (1%) of the national base Medicare Part D monthly premium for each month you were without creditable prescription drug coverage.
An example of how to estimate your 2016 Medicare Part D late-enrollment penalty
If you were previously without creditable prescription drug coverage for five years (60 months), you would pay, in addition to your monthly Medicare plan premium, a monthly penalty of $20.50 (60 months without drug coverage * 1% of $34.10) or an additional $246 per year.
As reference, here are the average Medicare Part D base premium values from past years that are used to calculate the late-enrollment penalties:
How high of a late-enrollment penalty could someone pay in 2016?
- 2016: $34.10
- 2015: $33.13
- 2014: $32.42
- 2013: $31.17
- 2012: $31.08
- 2011: $32.34
- 2010: $31.94
- 2009: $30.36
- 2008: $27.93
- 2007: $27.35
- 2006: $32.20
About $471 per year.
It is possible that you could have a penalty that reaches as high as an additional $39
per month that must be paid in addition to your 2016 Medicare Part D or Medicare Advantage plan premium. So, if you:
- were eligible for Medicare back before January 2006 and
- never joined a Medicare Part D plan until 2016 and
- are not eligible for the financial Extra Help program and
- have been without any other creditable prescription drug coverage since the start of the Medicare Part D program (115 months) (we begin to count months starting with June 2006 through December 2015),
... you would now have a monthly late-enrollment penalty of around $39
in 2016 – paid in addition to your monthly Medicare Part D plan premium.
We calculated the maximum penalty as 115 months without drug coverage * 1% of $34.10 = $39 rounded to nearest 1$). In other words, you will now pay an additional $471
penalty per year for your Medicare Part D coverage.
Click here if you would like to read more
on the Medicare Part D late-enrollment penalty.
Also, you can learn more in our Late-Enrollment Penalty (LEP) Articles
As a reminder, the CMS estimated weighted average Medicare Part D premium ($32.50 in 2016
) is not
used for purposes of calculating the late-enrollment penalty. Instead, the actual (non-weighted) Part D base beneficiary premium (or national base monthly Medicare Part D premium) is used to determine the amount of your late-enrollment penalty.
Please note: In certain situations, you can appeal your late-enrollment penalty
Also, as noted above, no late-enrollment penalties are assessed on Medicare beneficiaries who qualify for the Medicare Part D financial Extra-Help or Low-Income Subsidy (LIS) program