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 ($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:
Example (for 2020 penalty): How do I estimate my five-year late-enrollment penalty?
- 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
As shown in the table above, the 2020 national base Medicare Part D
premium is $32.74. So, if you were previously without some form of creditable
prescription drug coverage
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
Can my late-enrollment penalty can change year-to-year?
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
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).
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
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.
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?
" 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)
CMS late-enrollment penalty tip-sheets.
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.
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 more 2020 example calculations and CMS examples from past years:
CMS Tip Sheet - Calculating the Late Enrollment Penalty (2020 Revision)
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)