The Part D late enrollment penalty is a an amount added to your Part D monthly premium because you didn't sign up for drug coverage when it was available to you. If you go without a Part D plan or a Medicare Advantage plan with drug coverage for 63 days or more in a row after your Initial Enrollment Period (IEP) is over, you might have to pay this penalty.
How can I avoid the Part D penalty?
Join a Medicare Advantage plan with drug coverage or a Part D plan when you're first eligible.
During your IEP, if you sign up for a plan with drug coverage, you won't have to pay a penalty.
Don't go 63 days or more in a row without drug coverage.
After 63 days, you'll have to pay a penalty to add drug coverage.
Get covered by a Medicare Advantage plan with drug coverage, a Part D plan, or other creditable prescription drug coverage, like coverage from an employer or union, TRICARE, or the Department of Veterans Affairs, before then to avoid this.
Your plan must tell you each year if your drug coverage is creditable coverage. Keep this information because you might need it to join a Medicare drug plan later.
Tell your plan about any other drug coverage you had.
When you join a Medicare drug plan, they'll send you a letter if they think you went 63 days or more without creditable drug coverage. That letter will also have a form asking about any other drug coverage you had.
Fill this out with the information you saved and return it to your plan by the deadline in the letter to make sure you don't have to pay a penalty.
How much Is the Part D penalty?
Your penalty depends on how long you went without prescription drug coverage.
Medicare calculates it by multiplying 1% of the national base beneficiary premium by the number of full, uncovered months you didn't have coverage. This is rounded to the nearest 10 cents and added to your monthly Part D premium.
The national base beneficiary premium changes each year, so your penalty amount might increase each year.
Example:
Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment Period ended on May 31, 2017. She doesn’t have prescription drug coverage from any other source. She didn’t join by May 31, 2017, and instead joined during the Open Enrollment Period that ended December 7, 2019. Her drug coverage was effective January 1, 2020.
2023
In 2023, Medicare recalculated Mrs. Martinez’s penalty using the 2023 base beneficiary premium ($33.06). So, Mrs. Martinez’s new monthly penalty in 2023 is 31% of $33.06, or $10.25 each month. Since the monthly penalty is always rounded to the nearest $0.10, she pays $10.30 each month in addition to her plan’s monthly premium.
Here’s the math:
.31 (31% penalty) × $33.06 (2022 base beneficiary premium) = $10.25
$10.25 rounded to the nearest $0.10 = $10.30
$10.30 = Mrs. Martinez’s monthly late enrollment penalty for 2023
If you are receiving Extra Help, you won't pay the late enrollment penalty.
2024
In 2024, Medicare recalculated Mrs. Martinez’s penalty using the 2024 base beneficiary premium ($33.37). So, Mrs. Martinez’s new monthly penalty in 2024 is 31% of $33.37, or $10.34 each month. Since the monthly penalty is always rounded to the nearest $0.10, she pays $10.30 each month in addition to her plan’s monthly premium.
Here’s the math:
.31 (31% penalty) × $33.37 (2023 base beneficiary premium) = $10.34
$10.34 rounded to the nearest $0.10 = $10.30
$10.30 = Mrs. Martinez’s monthly late enrollment penalty for 2024
If you are receiving Extra Help, you won't pay the late enrollment penalty.