For example, if you turn 65 and become eligible for Medicare but decide to wait an entire year before enrolling in a Medicare Part D drug plan (and do not have some form of credible drug coverage, such as employer drug coverage or VA coverage), you will incur a penalty for the 12 months that you were without drug coverage.
The late enrollment penalty applies to both stand-alone Medicare Part D prescription drug plans (PDP) and Medicare Advantage plans that include drug coverage (MAPD).
Medicare calculates your late enrollment penalty by multiplying the number of full months you were without some form of creditable prescription drug coverage by 1% of the annual national base Part D premium (or "base beneficiary premium") (for example, $38.99 in 2026 and $36.78 in 2025), then this number is rounded to the nearest $0.10 - and then added to your monthly Part D premium.
For example, if you have gone 12 months without drug coverage, your 2026 LEP or late enrollment penalty should be around $4.70 per month (12 x 0.3899).
The Medicare Part D late enrollment penalty is added to a your monthly Medicare Part D drug plan premium and if incurred, you will pay a late enrollment penalty even if they are enrolled in a drug plan or MAPD with a $0 premium or even a dividend or giveback MAPD.
You can click here to see examples of how the LEP is calculated - or scroll down the page for some examples provided by Medicare.
Is the Medicare Part D late enrollment penalty permanent?
Yes, in most cases. The late-enrollment penalty is permanent for most people over 65 and you will pay the penalty as long as you are enrolled in a Medicare Part D prescription drug plan (PDP) or a Medicare Advantage plan that includes drug coverage (MAPD) - even if you change Medicare drug plans.
However, there are a few exceptions when the late-enrollment penalty is not permanent. For example, if you now qualify for the Low-Income Subsidy (LIS) or Medicare Part D Extra Help program, you will no longer pay a late-enrollment penalty (see Example 3 below).
Also, if you became eligible for Medicare before you were 65 and incurred a late enrollment penalty, when you join a Medicare Part D plan at 65 (your second Initial Enrollment Period), your previous late enrollment penalty will be removed. The Medicare Part D late enrollment penalty can change each year
As noted, the amount of the late enrollment penalty depends on how long the person went without Part D or creditable prescription drug coverage and the annual Medicare Part D base premium, so the amount of your late enrollment penalty can change each year.
[Please note the following annual changes in the Medicare Part D National Base Premium]:
|
Medicare Part D National Base Premium |
|
| Plan Year | National Base Premium |
| 2026 | $38.99 |
| 2025 | $36.78 |
| 2024 | $34.70 |
| 2023 | $32.74 |
| 2022 | $33.37 |
| 2021 | $33.06 |
| 2020 | $32.74 |
| 2019 | $33.19 |
| 2018 | $35.02 |
| 2017 | $35.63 |
| 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 |
Medicare Example 1:
Mr. Ray joined a Medicare drug plan before the end of his Part D Initial Enrollment Period in February 2017. However, he disenrolled from that Medicare drug plan effective December 31, 2017.
He later joined another Medicare drug plan in December 2019 during the annual Open Enrollment Period (AEP) and his coverage with his new plan was effective January 1, 2020. There was a period of 24 full months in which he didn't have creditable coverage (January 1, 2018 to December 31, 2019).
Therefore, Mr. Ray has to pay 1% of the 2026 base beneficiary premium ($38.99) for each full, uncovered month that he was without creditable coverage. Mr. Ray's 2026 penalty amount is $9.36 each month. Since the monthly penalty is always rounded to the nearest $0.10, he'll pay $9.40 each month in addition to his plan's monthly premium in 2026.
2026 Late enrollment penalty calculation
24 months x.3899 (1% of the 2026 base beneficiary premium of $38.99) = $9.36
$9.36 rounded to the nearest $0.10 = $9.40
$9.40 = Mr. Ray’s late enrollment penalty for 2026 - paid in addition to his Medicare Part D plan premium Medicare Example 2:
Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment Period ended
on May 31, 2016. She doesn't have prescription drug coverage from any other source. She
did not join a Medicare drug plan by May 31, 2016, and instead enrolled in a Medicare Part D plan during the annual Open Enrollment Period (AEP) that
ended December 7, 2018. Her Medicare drug coverage was effective starting January 1, 2019.
Since Mrs. Martinez was without creditable prescription drug coverage from June 2016 to December 2018 (31 months), her late enrollment penalty in 2019 was 1% of $33.19 for each of the 31 months or $10.29. Since the monthly penalty is always rounded to the nearest $0.10, she paid $10.30 each month in addition to her plan's monthly premium.
2019 Late enrollment penalty calculation
31 months x $0.3319 (the 2019 base beneficiary premium was $33.19) = $10.29
$10.29 rounded to the nearest $0.10 = $10.30
$10.30 = Mrs. Martinez's monthly late enrollment penalty for 2019
Important: Each year, Medicare recalculates Mrs. Martinez's penalty using the current base beneficiary premium.
For 2026, the base beneficiary premium is $38.99. So, Mrs. Martinez's 2026 monthly penalty is $12.10 each month (slightly more than what she first paid back in 2019).
2026 Late enrollment penalty calculation
31 months x $0.3899 (2026 base beneficiary premium is $38.99) = $12.0869
$12.0869 rounded to the nearest $0.10 = $12.10
$12.10 = Mrs. Martinez's monthly late enrollment penalty for 2026 - paid in addition to his Medicare Part D plan premium
Medicare's Extra Help Example 3:
Medicare provides additional information about Extra Help and the late enrollment penalty in the CMS Tip Sheet.
Is there a late enrollment penalty if a person gets Extra Help and had a break in coverage [without Extra Help]?
No. People who qualify for Extra Help under Part D won't be charged a late enrollment penalty when they enroll in a Medicare drug plan.
If an individual disenrolls from his or her Medicare drug plan and goes at least 63 days in a row without other creditable coverage, Medicare may charge a late enrollment penalty if he or she later joins a Medicare drug plan and is no longer eligible for Extra Help. However, when Medicare determines the person's late enrollment penalty, Medicare won't count any uncovered months from before the person became eligible for Extra Help.
For example, Mrs. Kim didn't join a Medicare drug plan before her Initial Enrollment Period ended in July 2017. In October 2017, she enrolled in a Medicare drug plan (effective January 1, 2018). She qualified for Medicare Part D Extra Help, so she wasn't charged a late enrollment penalty for the uncovered months in 2017.
However, Mrs. Kim disenrolled from her Medicare drug plan effective June 30, 2018. She later joined another Medicare drug plan in October 2019 during the annual Open Enrollment Period (AEP), and her coverage with the new plan was effective January 1, 2020.
Unfortunately, Mrs. Kim no longer qualified for Extra Help when she enrolled in October 2019. Since leaving her first Medicare drug plan in June 2018 and joining the new Medicare drug plan in October 2019, she didn't have other creditable coverage. However, she was still deemed eligible for Extra Help through December 2018 -- since Extra Help is granted for the calendar year.
When Medicare determines her late enrollment penalty, Medicare does not count:
- The uncovered months from 2017, before Mrs. Kim became eligible for Extra Help (since she is now eligible for Extra Help)
- The uncovered months in 2018 that Mrs. Kim didn't have creditable coverage because she was still deemed eligible for Extra Help through December 2018
Therefore, effective January 1, 2026, she pays 1% of the 2026 base beneficiary premium ($38.99) or $0.3899 for each full, uncovered month that she was without creditable coverage and wasn't deemed eligible for Extra Help. So Mrs. Kim's penalty amount is $4.68 each month. Since the monthly penalty is always rounded to the nearest $0.10, she pays $4.70 each month in addition to her plan's monthly premium in 2026.
2026 Late enrollment penalty calculation
12 months x.3899 (1% of the 2026 base beneficiary premium of $38.99) = $4.68
$4.68 rounded to the nearest $0.10 = $4.70
$4.70 = Mrs. Kim's monthly late enrollment penalty for 2026 - however, no penalty will be assessed if Mrs. Kim is, once again, becomes eligible for Medicare Part D Extra Help
Important: If you feel Medicare has calculated the penalty in error, you have the right to appeal your penalty.
As noted in the Medicare Tip Sheet:
What if a person doesn't agree with the late enrollment penalty?
If a person doesn't agree with the late enrollment penalty, he or she may be able to ask Medicare to review its decision. This is called a “reconsideration.” The person's drug plan will send information about how to request a reconsideration. The form lists the reasons a person can ask for and get a review of his or her case.
If the person wants a review of his or her case, the person should complete the form and return it to the address or fax number listed on the form, and a Medicare contractor will review the case. The person must mail or fax the form within 60 days from the date on the letter stating that the person had to pay a late enrollment penalty.
The person should also send any proof that supports his or her case, like information about previous creditable coverage. For example, if the person had drug coverage from an employer or union plan, he or she may provide a copy of the notice of creditable prescription drug coverage from the employer or union plan.
Can a person who doesn't agree with the late enrollment penalty pay only the premium and ignore the penalty?
No. According to Medicare law, the late enrollment penalty is part of the premium, so a person who has a late enrollment penalty must pay it with the premium. A person with a late enrollment penalty must also pay the penalty even if he or she asked Medicare's contractor to review its decision, and the person hasn't yet gotten a decision. Medicare drug plans can disenroll members who don't pay their premiums, including the late enrollment penalty portion of the premium.
How soon will a person get a reconsideration decision?
In general, Medicare's contractor makes reconsideration decisions within 90 days. The contractor will try to make a decision as quickly as possible. However, a person may request an extension, or Medicare's contractor can, for good cause, take an additional 14 days for a person's case to be resolved.
What happens if the late enrollment penalty reconsideration decides the penalty is wrong?
If Medicare's contractor reviews a case and decides that all or part of the late enrollment penalty is wrong, the Medicare contractor will send the person and his or her drug plan a letter explaining its decision. The Medicare drug plan will remove or reduce the late enrollment penalty and will send the person a letter that shows the correct premium amount and explains whether there will be a refund.
What happens if the late enrollment penalty reconsideration decides the penalty is correct?
If Medicare's contractor reviews a case and decides that the late enrollment penalty is correct, the Medicare contractor will send a letter explaining the decision, and the person must pay the late enrollment penalty.
Also, as noted by Medicare:
If Medicare’s systems show that a person has a break in creditable coverage, will the person have an opportunity to tell the plan about his or her prior drug coverage?
[Yes.] When a person joins a Medicare drug plan, the plan will review Medicare's systems to see if the person had a potential break in creditable coverage for 63 days or more in a row. If so, the Medicare drug plan will send the person a notice asking for information about prior prescription drug coverage. [This notice is called the “Declaration of Prior Prescription Drug Coverage.”]
It's very important that the person complete this form and return it by the date on the form, because this is the person's chance to let the plan know about prior coverage that might not be in Medicare's systems. Also, the person can, but isn't required to, send any proof of his or her prior coverage, like a copy of the notice of creditable prescription drug coverage [“Notice of Creditable Prescription Drug Coverage”] from an employer or union health plan. If the plan allows the person to provide this information over the phone instead, he or she must do so by the date on the form.
The information provided helps the plan tell Medicare whether there was a gap in creditable coverage of 63 days or more in a row. If the person doesn't provide this information to the plan by the date on the form, the plan will determine how many full, uncovered months the person was eligible to join a Medicare drug plan and didn't, based on the information in the Medicare system. Then Medicare (not the plan), will determine the late enrollment penalty amount using the calculation method described [above]. [additional emphasis added]
Is there a late enrollment penalty if a person waits one month after he or she was first eligible to enroll in a Medicare drug plan?
No. A person must be without creditable coverage 63 days or more in a row any time after he or she was first eligible to enroll to be charged a late enrollment penalty. Since the person had only one month without Part D or creditable coverage, he or she wouldn't have to pay a penalty.
Read more in our Late Enrollment Penalty (LEP) FAQs and LEP Articles.
Source:
Medicare tip sheets on calculating the late enrollment penalty.