If I was eligible for Medicare before age 65 and didn't join a Medicare drug plan, will I still pay a late-enrollment penalty if I decide to join a Part D drug plan when I turn 65?
No. When you turn 65, you can use your
second
initial enrollment period (IEP2) to join a Medicare Part D plan and you
will not be assessed any late-enrollment penalty that you may have accrued prior to turning 65.
Your Medicare Part D Initial Enrollment Period (IEP)
As a reminder, if you have a disability and are eligible for Medicare Part A and/or
Medicare Part B before you reach 65, you are also eligible to enroll in a Medicare Part D
prescription drug plan or Medicare Advantage plan that includes prescription drug coverage
(PDP or MAPD).
Your Medicare Part D Initial Enrollment Period (IEP) is the seven (7) month period around
the month when you become eligible for Medicare benefits - that is three months before the
month when you become eligible - the month of Medicare eligibility - and three months after
the month of eligibility.
In fact, if you are entitled to Medicare benefits before you turn 65, you will actually
have two Initial Enrollment Periods:
(1) you will have an IEP when you first become eligible for Medicare and
(2) you will have a second IEP (IEP2) when you reach 65.
Your IEP and your late-enrollment penalty:
If you decide not to join a Medicare Part D plan after the end of your IEP (or IEP2) and
then later join a Medicare Part D plan, you may be subject to a
late-enrollment penalty
for each month that you were without some form of
creditable drug coverage.
So if you are eligible for Medicare at age 60 and decide not to join a Medicare Part D
plan during your IEP (and do not have any other drug coverage), you can be assessed
a late-enrollment penalty (LEP) if you decide to join a Medicare drug plan before turning 65.
Example late-enrollment penalty
For example, if you decide to wait two years before joining a Medicare drug plan when you
first begin Medicare, you would have 24 months without drug coverage and this number of months
multiplied by 1% of the annual base Part D premium would be your monthly penalty paid in
addition to your Part D premium ($8.30 in 2024, calculated as 24 months * 1% of
$34.70 or $8.30 ($8.328 rounding to the nearest $0.10)).
Joining a Medicare Part D plan during your IEP2 without your past penalty
As noted, if you receive Medicare benefits due to a disability, you actually receive a second
Medicare Part D initial enrollment period (IEP2) when you turn 65 and you will again have a
seven month window of time to join a Medicare Part D prescription drug plan around the month
when you turn 65 (three months before the month when you turn 65 plus the month you turn 65 plus
three months after the month you turn 65).
If you have a disability and choose to join a Medicare Part D plan when you turn 65
(during your second IEP), you will not be subject to any
past late-enrollment penalties - even if you did not enroll in Medicare
when you first became eligible due to your disability.
Example late-enrollment penalty removed with IEP2
So following the example above, if you had a $8.30 late-enrollment penalty in 2024 and
then turned 65, used the your IEP2, and joined another (or continued with your) Medicare Part D plan, you
would no longer have your pre-65 late-enrollment penalty.
Source of this information?
You can see the official Medicare examples below and information from
Social Security Administration about the late-enrollment penalty and having a second IEP.
MEDICARE PRESCRIPTION DRUG BENEFIT MANUAL
CHAPTER 4 Creditable Coverage Period Determinations and the Late Enrollment Penalty
Section 10.1.3 - End of the Subsequent Part D IEP
An individual who is entitled to Medicare prior to turning age 65 (e.g.,
those who were entitled based on disability), will have a new or
subsequent Part D IEP [Initial Enrollment Period] when they become entitled to Medicare based on
age. If an enrollee attains age 65 while enrolled in a Part D plan and
has been paying an LEP [late-enrollment penalty], his/her LEP will end on the day before his/her
subsequent IEP begins, which is three months prior to the month s/he
attains age 65.
. . .
Example: Mrs. Brown was initially eligible for Medicare based on a
disability, but never enrolled in a Part D plan. She will turn 65 on May
19 and her new (or subsequent) IEP will begin on February 1 and
continue through August 30. If she enrolls in a Part D plan during this
subsequent IEP, she will not be subject to an LEP.
Note: If, in this example above, Mrs. Brown was already enrolled in a
Part D plan when she attained age 65, her current plan must take
appropriate actions to have the LEP removed effective on the date that
her IEP begins, which is February 1. See §30.4.3 for more information.
Section 30.4 - Reporting Adjustments to Creditable Coverage Period Determinations Previously Reported to CMS
D. Reporting Adjustments Based on Subsequent Part D IEPs
As explained in §10.1.3 of this Chapter, an individual who is
eligible for Medicare prior to turning age 65, will have a new
(subsequent) Part D IEP based on entitlement to Medicare due to
attaining age 65. Any uncovered periods prior to the first day of
their subsequent Part D IEP will not be counted towards any future
number of uncovered months.
...
Example:
Mrs. Smith is entitled to Medicare due to disability, but did not join a
Medicare prescription drug plan when she was first eligible, and has been paying a LEP based on 9 uncovered months. Mrs. Smith turns age 65 on April 3, 2008. Her last day to be assessed an LEP is December 31, 2007, the day before her second or subsequent IEP begins on January 1, 2008.
(Source:
https://www.cms.gov/medicare/ eligibility-and-enrollment/
medicarepresdrugeligenrol/ downloads/
final_cy2010_medicareprescriptiondrug benefitmanualchapter4_dec2009.pdf
[emphasis added])
See also: the Social Security Administration online manuals
(SSA - POMS: HI 00805.015 - Initial Enrollment Period - 03/17/1993)
"HI 00805.015 Initial Enrollment Period
A. Policy - First opportunity to enroll
The IEP is the first opportunity an individual has to enroll in SMI. The
IEP is based on the first month of eligibility for HI for those who are
eligible for SMI based only on HI entitlement, as noted in HI 00805.005 A.1. and B.
The IEP may also be based on the month in which the individual meets the
requirements related to attaining age 65 and having the required
residence/ citizen/alien status, as noted in HI 00805.005 A.2.
B. Policy - 7 month period
Except for people whose first month of eligibility occurred before 3/66 (see HI 00805.700 A.), an individual's IEP consists of 7 months.
The IEP begins on the first day of the third month before the first
month of eligibility (as defined in HI 00805.005 C.) and ends on the
last day of the third month following the first month of eligibility.
EXAMPLE: An individual's first month of eligibility is 7/92. The IEP begins 4/1/92 and ends 10/31/92.
C. Policy - more than one IEP
An individual under age 65 may have more than one IEP if he/she establishes entitlement to HI based on disability or ESRD more than once.
EXAMPLE: A disabled person has a
period of DIB entitlement terminated, along with HI and SMI. If HI is
reestablished based on a second period of DIB entitlement, or based on
ESRD, the beneficiary has a new IEP beginning 3 months before the new
date of entitlement to HI.
NOTE: No matter how often, or
under what circumstances, entitlement occurred prior to age 65, every
eligible beneficiary has a new IEP at age 65.
An individual age 65 or over has only one IEP, except where the aged individual develops ESRD after age 65 and may have a second IEP based on ESRD. (See HI 00805.085 and HI 00801.258 C.)
NOTE: No months prior to a new IEP are countable for premium surcharge
purposes. If the beneficiary had paid a surcharge during the earlier
period of SMI entitlement, that has no effect on the premiums due for
the new enrollment.
D. Reference
• IEP extends into a GEP and ends before the end of the GEP, HI 00805.030.
• IEP for foreign residents who are eligible for HI and foreign residents who are ineligible for HI, HI 00805.007.
• Effect of birth on first day of month, HI 00805.153.
• Additional IEP information, HI 00805.165. " [emphasis added]
(https://secure.ssa.gov/poms.nsf/lnx/0600805015)