What is the Medicare Part D late enrollment penalty?

Question: What is the Medicare Part D late enrollment penalty?

Answer: The Medicare Part D late enrollment premium penalty (LEP) is a financial penalty levied on Medicare beneficiaries if they did not enroll into a Medicare Part D prescription drug plan during their initial enrollment period (IEP) or were without Part D coverage for more than 63 days - and they did not have any other creditable prescription coverage (drug coverage that was at least as comprehensive as Medicare Part D coverage, such as VA coverage or employer benefits).  If you are subject to a  LEP, you will have an additional cost added to your monthly Medicare Part D premiums.

As noted, this means that if you cancel your Medicare Part D coverage or are without creditable prescription drug coverage for more than 63 days, you will also be subject to the premium penalty should you ever decide to re-enroll in a Medicare Part D plan.

Please note, if you are eligible for Medicare Part D Extra Help (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.

Your Medicare Part D late enrollment premium penalty is calculated each year by the Centers for Medicare and Medicaid Services (CMS) and then reported by CMS 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 your penalty.

The LEP is calculated as an additional 1% of the average annual base Medicare Part D premium for every month that you were without creditable coverage. So, CMS or Medicare 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).

Please note, if your Medicare Part D LEP is permanent and can increase every year.

As reference, here are the national base average premium values used by CMS to calculate the late enrollment penalties for past years:

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

• 2018 Medicare Part D Late-Enrollment Premium Penalties will Decrease by 1.71%
  
• 2017 Medicare Part D Late Enrollment Premium Penalty example (4.5% increase)
• 2016 Late Enrollment Premium Penalty example (3% increase)
  
• 2015 Late Enrollment Premium Penalty example (2% increase)
  
• 2014 Late Enrollment Premium Penalty example (4% increase)
  
• 2013 Late Enrollment Premium Penalty example
  
  

2019 Example: How do I estimate my five-year late-enrollment penalty?

As shown in the table above, the 2019 national base Medicare Part D premium is $33.19. So, if you were previously without creditable prescription drug coverage for five years (or 60 months), you would pay, in addition to your monthly Medicare plan premium, a 2019 monthly penalty of $19.91 (60 x (1% x $33.19)) - or an additional $252 per year. Using this same example, you would have paid a 2013 monthly penalty of $18.70 or about $238.92 per year.

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:  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.


Click here if you would like to read more on the Medicare Part D late-enrollment penalty.

Also, you can learn more in our Blog articles about the Late Enrollment Penalty (LEP).

Please remember, if you do not agree with the late enrollment penalty that you have received, you have the right to appeal a LEP .  You can learn more about LEP appeals by calling the Member Services department of your Medicare Part D plan or you can read more here: 
https://q1medicare.com/PartD-AppealMedicaresEnrollmentPenalty.php