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 coverage (like VA or employer benefits), you could be subject to a penalty that is added to your monthly Medicare Part D premiums.
In addition, 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.
The Medicare Part D late-enrollment premium penalty is assessed for
every month a Medicare beneficiary is without some form of creditable
prescription drug coverage. "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
For example, if you turned 65 (or became eligible for Medicare) in January 10, 2012, your
Medicare Part D Initial Enrollment Period would extend 3 months beyond your birthday month or
until April 2012. 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 2012 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).
The actual Medicare Part D late-enrollment premium penalty is calculated as a premium increase
of 1% of the annual based premium (for example, $33.37 in 2022
for every month you have been without creditable prescription drug coverage - assuming you
do not have any other form of creditable prescription coverage or are otherwise exempt from
To continue the example, if you never had Medicare Part D coverage - and were first eligible
for Medicare on January 10, 2018 (hint:
you can use your own eligibility month
to calculate the actual penalty) - and you enroll in a 2022 Medicare Part D plan starting
January 1, 2022, your penalty may be as high as $14.70 per month paid in addition
to your monthly Medicare Part D premium
(May 2018 through December 2021 = 44 months * 1% of $33.37, the 2022 base Medicare Part D premium).
For another explanation of the late-enrollment penalty, please see:
The penalty is permanent
and will fluctuate every year
based on the national average base Medicare Part D
Even if you join a Medicare Advantage plan with a $0 premium, you will still pay a late-enrollment
penalty even though you do not actually pay anything for the premium. As noted by Medicare:
"... even if the person decides to join another Medicare drug plan, he or she will
still have to pay the penalty once enrolled in a new plan. This also means that if a person
joins a plan that has a $0 monthly premium, he or she will still owe a penalty."
Here is an example chart showing how a Medicare Part D late-enrollment penalty can increase
over the years. This chart is assuming that the Medicare beneficiary was eligible for a
Medicare Part D plan back in 2006, but decided not to join a Medicare prescription drug plan
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
Examples provided by Medicare (Centers for Medicare and Medicaid Services)
Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment Period
ended on May 31, 2012
. She doesn’t have prescription drug coverage from
any other source. She didn’t join by May 31, 2012, and instead joined during the
Open Enrollment Period that ended December 7, 2014. Her drug coverage was effective
January 1, 2015.
Since Mrs. Martinez was without creditable prescription drug coverage from June 2012
through December 2014 [31 months without drug coverage], her penalty in 2015 was 31%
(1% for each of the 31 months) of $33.13
(the national base beneficiary premium for 2015) or $10.27. 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 in 2015.
Here’s the math for the 2015 penalty:
.31 (31% penalty) x $33.13 (2015 base beneficiary premium) = $10.27
$10.27 rounded to the nearest $0.10 = $10.30
$10.30 = Mrs. Martinez’s late enrollment penalty for 2015
In 2016, Medicare recalculated Mrs. Martinez’s penalty using the 2016 base
beneficiary premium ($34.10). Therefore, Mrs. Martinez’s new monthly penalty
in 2016 is 31% of $34.10
or $10.57 each month. Since the monthly penalty is
always rounded to the nearest $0.10, she’ll pay $10.60 each month in addition to her
plan’s monthly premium.
Here’s the math for the 2016 penalty:
.31 (31% penalty) x $34.10 (2016 base beneficiary premium) = $10.57
$10.57 rounded to the nearest $0.10 = $10.60
$10.60 = Mrs. Martinez’s late enrollment penalty for 2016
(source: Medicare, with emphasis and clarification)
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 Blogs on the Late-Enrollment Premium Penalty: https://q1medicare.com/q1group/ MedicareAdvantagePartD/category /Late-Enrollment-Penalty/11/.html
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.
Any chance of repealing the late-enrollment penalty?
Back in 2005 and 2006, some people thought that the 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 or Premium 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.