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How do I calculate my Medicare Part D Late-Enrollment Penalty?



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Question: How do I calculate my Medicare Part D Late-Enrollment Penalty?
Category: Late-Enrollment Penalty (LEP)

Answer: Your Medicare Part D late-enrollment penalty is calculated as the number of months you are without some form of "creditable" prescription drug coverage multiplied by 1% the annual base Medicare Part D premium (for example, $33.19 in 2019 and $35.02 in 2018).

Not a big fan of math? No problem.

The amount of 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.  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).

The letter from your Part D plan will also detail how CMS calculated the penalty and explain how you can ask for a review of your the Late-Enrollment Penalty (or LEP).

"Creditable" prescription drug coverage means drug coverage that is at-least-as-good-as basic drug coverage provided by a Medicare Part D plan.  If you have employer drug coverage, your employer health plan administrator will have sent you a letter telling whether your drug coverage is "creditable".

As reference, here are the average national base Medicare Part D 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

You can click here to read more about how CMS calculates Medicare Part D late-enrollment penalties.

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.

Who will pay a late-enrollment penalty?

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 will also be subject to the premium penalty.

How can my late-enrollment penalty increase over time?

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 until 2019.

Max_Late-enrollment_penalty_accrued_since_2006.jpg

Late-enrollment Penalty Blogs
For more information, you can click here to review our recent Blog articles detailing the late-enrollment penalty.

Late-enrollment Penalty Frequently Asked Questions (FAQs)
You can also click here if you would like to review more of our Frequently Asked Question (FAQ) regarding the Medicare Part D 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

The Late-Enrollment Penalty and the Medicare Part D Extra Help program
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.

CMS late-enrollment penalty tip-sheets.
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

See other past examples from CMS below:


CMS Tip Sheet - Calculating the Late Enrollment Penalty (2018 Revision)
CMS Tip Sheet - Calculating the Late Enrollment Penalty (2016 Revision)
CMS Tip Sheet - Calculating the Late Enrollment Penalty (2014 Revision)
CMS Tip Sheet - Calculating the Late Enrollment Penalty (2011 Revision)
CMS Tip Sheet - Calculating the Late Enrollment Penalty (2009 Revision)
CMS Tip Sheet - Calculating the Late Enrollment Penalty (2006)


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