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Medicare Part D Late Enrollment Penalty


If you’re enrolling in Medicare, you may question whether you really need Part D prescription drug coverage. Beneficiaries pay a monthly premium for Part D, it may feel like an unnecessary expense if you don’t take any prescriptions. You may have other prescription benefits and wonder if you need Part D.

Skipping Part D can be a costly decision, depending on your situation. You may find yourself without insurance to cover medications if you suddenly become ill.

Then, when you finally do enroll, you may pay a Medicare Part D late enrollment penalty. This will be in the form of a higher premium for as long as you have Part D.

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What is the Medicare Part D Late Enrollment Penalty?

The Part D late enrollment penalty is a penalty that’s addied in addition to the national base benefificary Part D premium. The amount is 1% for every month you went without coverage when first eligible. The penalty is in place to encourage beneficiaries to enroll in a Part D plan when first eligible if they don’t already have creditable coverage.

When you first become eligible for Medicare, you have an Initial Enrollment Period to sign up for coverage. Then, you’re eligible for Part D.

If eligible because you’re turning 65, your Initial Enrollment Period begins three months before your 65th birthday month and ends three months after your birthday month.

After that IEP, you’ll pay a Part D late penalty if you go without one of these types of drug plans for 63 days or more:

  • A Part D plan
  • Prescription coverage through a Medicare Advantage plan
  • Any other Medicare plan that includes Medicare PDP coverage
  • Another healthcare plan that includes prescription drug coverage that is at least as good as the coverage provided by Medicare.

Medicare Part D Late Enrollment Penalty Calculator

The Medicare Part D penalty is based on the number of months you went without PDP coverage. For each month without coverage, you will pay an additional premium of 1 percent of the current “national base beneficiary premium.”

How to Calculate Your Medicare Late Enrollment Penalties

For 2021, the average beneficiary premium is $33.06.

This is not a one-time penalty. You’ll pay it every month for as long as you have Medicare prescription coverage. Your Part D penalty will be rounded to the nearest $.10 and added to your Part D premium.

Since the penalty is always based on the current year’s national beneficiary premium, it may change or go up each year.

Part D late enrollment penalty calculation can be hard to figure out. So, here’s an example to show how this works.

Suppose your Initial Enrollment Period ended and you waited 33 months to sign up for Part D. Your Part D penalty would be 33 percent of the national beneficiary premium, one percent for each of the 33 months you waited.

This would be calculated as $33.06 x .33 = $10.90. The Part D penalty is rounded to the nearest 10 cents.

You’ll pay this penalty in addition to your Part D Premium. The best way to avoid paying the Part D late enrollment penalty is to enroll in a Prescription Drug plan as soon as you become Medicare eligible.

Part D When Collecting Social Security Disability Income

If you don’t enroll in Part D when you’re first eligible, even if you’re eligibility comes from disability, you’re going to incur a penalty. To avoid the penalty, keep up with your Medicare eligibility, know your Part B effective date, and sign up for Part D as soon as possible. Just because you’re not 65, doesn’t mean the penalty doesn’t apply; the penalty DOES apply to anyone with Medicare Part B. So, don’t delay your enrollment.

FAQs

What is the Part D penalty cap?
Since this penalty didn’t start until 2006, you can only be penalized starting from that year. The capped amount of months increases each month.
Are there other drawbacks to waiting to enroll in a Part D plan?
You can’t just enroll in Part D whenever you want. After your Initial Enrollment Period ends, you can usually only enroll during the Annual Enrollment Period. That means that if you wait to sign up for Part D, you may find yourself paying full price for expensive medications if you suddenly become ill. It’s better to have coverage before you need it; you wouldn’t buy car insurance after a car accident, so, don’t wait to buy prescription coverage.
What if I already have prescription drug coverage?
If you already have coverage through an employer, union, or another source, you may not have to worry about the Part D penalty. The key is whether the coverage you now have is “creditable”. Creditable coverage is the same as, or better than, the benefits Medicare provides. You will not accumulate any penalties during the time you have other creditable coverage. If you lose this coverage through no fault of your own, you should be eligible for a Special Enrollment Period. When you sign up within 63 days of losing coverage, you will not have to pay penalties. You should receive a notice each year saying whether your coverage is creditable. Save this letter with your important papers – you may have to show it to Medicare to avoid a penalty.

Medicare Part D Late Enrollment Penalty Reconsideration

If you’re penalized by Medicare, you can appeal it. All you must do is complete a reconsideration request form that’s available on CMS.gov.

If you qualify for extra help, you may qualify for assistance paying the Part D penalty. Some lower-income beneficiaries have the penalty waived altogether. You can contact Social Security to apply for Medicare Extra Help.

How to Get Help Deciding When to Enroll in Part D

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Lindsay Engle

Lindsay Engle is the Medicare expert for MedicareFAQ. She has been working in the Medicare industry since 2017. She is featured in many publications as well as writes regularly for other expert columns regarding Medicare. You can also find her over on our Medicare Channel on YouTube as well as contributing to our Medicare Community on Facebook.

20 thoughts on “Medicare Part D Late Enrollment Penalty

  1. Hi…I’m on disability and have a large penalty…..because I dropped part D several years ago. My question is, will I have the opportunity to take out part D again when I turn 65 without a penalty? Thanks

  2. I don’t understand the premise behind this penalty. Why does Medicare want to force people into buying a Part D plan if they don’t need one? I don’t take any prescriptions. It should be voluntary based on a person’s needs.

    1. Hi Lorin! This is a question we get asked a lot. In order for the program to be funded, we need beneficiaries to buy into it. If everyone delays enrolling until they need it, then the program would run out of funds. They put the penalty in place to encourage beneficiaries to enroll sooner rather than later.

  3. Hi Lindsey,

    My mother is 84 years old and has never had part d coverage, we are trying to find out what the LEP is going to be. can you please help.

    Thank you

    1. Hi Kim! The penalty would be 1% of the current national average x 228 months. Your mother’s LEP would be around $75 in addition to the monthly premium that comes with the plan she chooses to enroll in. For example, if the plan she wanted to enroll in came with a monthly premium of $25, she would end up paying $100 a month for the plan. If she is eligible for Extra Help, her LEP would be waived.

  4. I was born in 1932 and I signed up for Medicare in 1997. I never opted for Part D. I am 88, a widow, and have had a long term care policy for decades. I currently,share my home with my son’s family. The supplemental insurance premium currently costs me $199,50/month.. I expect that premium to increase to about $210.00/month in 2021. I have never signed up for Part D. My health is still reasonably good; My driver’s license was just renewed for an additional six years. Here is my question: Will my estate be billed–for the penalty for not having had Part D coverage– when my “estate” is settled?

    1. Hi Marilyn! No, your estate will not be billed. The penalty will only impact you when you enroll in Part D later. It will reflect on your monthly premium. If you never sign up for Part D, then the penalty will never impact you. Let me know if you have any more questions!

  5. I have a small LEP that will be applied for 2021, but I have an Advantage Plan supplement for the Part D coverage. To whom do I pay the LEP to … Medicare (via SS deduction for my Part B) or to the Advantage Plan’s administration? (I have a zero $ premium)

  6. I have not had Part D Medicare coverage for 12 years. My husband and I were never aware that Part D was required. If it was why wasn’t it just taken out of our social security like Part A and B? We did not have a lot of prescriptions so never thought about it. My husband died 6 years ago and still did not take a lot of prescriptions nor did I. Now at age 83 and getting older I still do not have a lot of prescriptions, but people think I should have prescription coverage. I understand there is a penalty for not having Part D. How much would I be required to pay back?

    1. Hi Judith! For each month you went without coverage, you will pay an additional premium of 1% the current national premium. If you went 12 years without coverage, that’s 144 months. The current national premium is $33.06. $33.06 x 1.44 = $46.28. You would add that to $33.06 which brings your premium to around $80 per month.

  7. Hi Lindsay, if a person is eligible for Medicare prior to 65, and they didn’t enroll in Part D, I do know that if they enroll in Part D within their 2nd ICEP at 65 they get a clean slate and don’t have to pay the penalty. However, if someone is on Medicare disability and doesn’t enroll in Part D and also chooses not to enroll in Part D at 65, would the penalty start when they first became eligible for Medicare or would the penalty reset and start from when they turned 65?

    1. Hi Jason. This is a great question! The penalty will start from when they aged into Medicare at 65. The penalty would not be backdated. I hope this helps!

  8. Is the premium for 2021 at $33.06 monthly for everyone, or does it depend upon the plan selected (such as $23.90 premium for Cigna-HealthSpring Rx Secure)? I assume the “premium” (plus any late enrollment penalty) is deducted monthly from Social Security retirement payments.

    1. Hi Thomas! You are correct. The $33.06 is the average national premium, it could be a little less or a little more depending on the plan you choose. You can choose to have the premium deducted from your Social Security check or you can pay it yourself. I hope this helps!

  9. my husband had a medicare part d plan for a while, once we got married he became ineligible for his Medicaid and I was not familiar with the medicare part d information and did not renew it. We have been married for about 8 years, he probably has not had any part d coverage for 5-7 years of that, I paid cash for all his prescriptions, should I get him enrolled in a part D plan, what kind of penalty would he be looking at

    1. Hi Martha! The penalty is calculated by adding 1% of the average national premium for every month your husband went without coverage after he became eligible. So, if we use 5 years, that means he went 60 months without coverage. If you multiple the current years’ national premium, you would get $33.06 x .60 = $19.83. That means his premium would be around $33.06 + $19.90 = $52.96. If you pay less than that a month for his current medications and are not concerned about him being prescribed more medications in the future, then you may not need to enroll your husband in a Part D plan. However, since it’s hard to predict what could happen in the future with his health, it might be worth enrolling him in a stand-alone Part D plan. If you wait another 5-10 years, his premium will be much higher.

  10. All these articles are written by insurance agents with skin in the game. I will skip part D until I need it. I have not filled a prescription in decades. The penalty is peanuts. YMMV

    1. Hello! No, agents do not write our content. The penalty may not be a lot for some, but if you wait ten years to enroll, the penalty can quickly add up for some.

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