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


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 ($33.19 in 2019 and $32.74 in 2020).

As reference, here are the average national base Medicare Part D premium values used by Medicare to calculate the late-enrollment penalties for past years:
  • 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
Example (for 2020 penalty):  How do I estimate my five-year late-enrollment penalty?

As shown in the table below, the 2020 national base Medicare Part D premium is $32.74.  So, if you were previously without some form of creditable prescription drug coverage for five years (or 60 months), you would pay, in addition to your monthly Medicare plan premium, a 2020 monthly penalty of $19.60 (60 x (1% x $32.74)) - or an additional $235 per year. Using this same example of a 60 month penalty, you would pay a 2019 monthly penalty of $19.90 (60 x (1% x $33.19) - rounded to the nearest $0.10) or about $252 per year.

Can my late-enrollment penalty can change year-to-year?

Yes.  Your Medicare Part D late-enrollment penalty will change based on the annual national base Part D premium.  For example, if you were eligible for Medicare, but without creditable prescription drug coverage from 2006 through 2010 (55 months without drug coverage) and then joined a Medicare Part D plan in 2011, you would pay, in addition to your monthly Medicare plan premium, a monthly penalty of $17.80 (55 months without drug coverage * 1% of $32.34 (the national base premium for 2011) - rounded to the nearest $0.10) or around an additional $214 per year for your drug coverage.

In comparison, your 2020 penalty would be slightly higher or $18.00 (55 months without drug coverage * 1% of $32.74 (the national base premium for 2020) - rounded to the nearest $0.10) or around an additional $216 per year for your drug coverage.

If you stayed in a Medicare Part D plan since 2011, here is a chart showing how your 55-month late-enrollment penalty would have changed over the years (2011 to 2020).

Example_of_how_a_Medicare_Part D_Late_Enrollment_Penalty_changes

If I never joined a Medicare drug plan, how can my late-enrollment penalty increase over time?

In 2020, the maximum late-enrollment penalty can reach as high as $641 per year - paid in addition to your Medicare plan premium and coverage. Here is an example chart showing how a Medicare Part D late-enrollment penalty can increase over the years - and the cost of waiting to enroll in a Part D plan.

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 2020.

Max Late-enrollment penalty accrued since 2006

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 which can change 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).

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

What is "creditable" drug coverage?

"Creditable" prescription drug coverage means drug coverage that is at-least-as-good-as basic drug coverage provided by a Medicare Part D plan.  Some examples of creditable coverage are, VA coverage, TRICARE coverage, coverage from your Union healthcare, or employer health 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".

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.

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.

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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