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Medicare Part D Penalty

Summary: The Medicare Part D late enrollment penalty fee can add up and get expensive if you put off prescription drug coverage for too long. Here, we explain exactly what the Medicare Part D penalty is and how to avoid it. Estimated Read Time: 6 mins

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Table of Contents:

  1. What is the Medicare Part D Late Enrollment Penalty?
  2. Is There a Medicare Part D Penalty Under 65?
  3. Medicare Part D Late Enrollment Penalty Calculator
  4. Is There a Medicare Part D Penalty Cap?
  5. Medicare Part D Penalty Exceptions
  6. Medicare Part D Penalty Appeal

When enrolling in Original Medicare, you may question whether you need Medicare Part D prescription drug coverage. A Medicare Part D prescription drug plan helps cover the cost of your prescription medication when you have Medicare. You will pay a monthly premium for Medicare Part D and reap the benefits when picking up medications from the pharmacy.

If you are currently not taking any medications or your drug costs without insurance are low, Medicare Part D coverage may feel like an unnecessary expense. However, delaying coverage could leave you responsible for the Medicare Part D late enrollment penalty.

Thus, putting off Medicare drug coverage can be costly, depending on your situation. You may find yourself without insurance to cover medications if you suddenly become ill. Then, when you finally enroll in Medicare Part D coverage, you may find that you are responsible for a Medicare Part D late enrollment penalty. This results in a higher out-of-pocket expense each month that never goes away and increases the longer you wait.

What is the Medicare Part D Late Enrollment Penalty?

The Medicare Part D late enrollment penalty is an additional cost on top of your monthly Medicare Part D premium. This extra charge is based on the current year’s average national Medicare Part D premium.

The Medicare Part D penalty amount is 1% of the average premium for every month you went without creditable drug coverage when first eligible for Medicare. The penalty is in place to encourage beneficiaries to enroll in a Medicare Part D plan if they lack creditable coverage, meaning drug coverage at least as good as a Medicare drug plan.

 

When you first become eligible for Medicare, you receive an Initial Enrollment Period to sign up for Original Medicare. Once you have Original Medicare, you are eligible for Medicare Part D.

If you age into Medicare, your Initial Enrollment Period begins on the first day of the month, three months before your 65th birth month. It ends on the last day of the third month after your birth month. If you lack creditable coverage, you must sign up for Medicare prescription drug coverage during this window to avoid the Medicare Part D penalty.

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After your Initial Enrollment Period, you will pay the Medicare Part D late penalty if you go without one of these types of drug plans for 63 days or more:

  • Medicare Part D plan
  • Prescription coverage through Medicare Part C – a Medicare Advantage Prescription Drug (MAPD) plan
  • Another healthcare plan that includes prescription drug coverage that is at least as good as the coverage Medicare provides

Drug plans that are considered creditable include:

  • Current or former employer drug coverage
  • Union drug coverage
  • Group drug coverage
  • VA drug coverage

Is There a Medicare Part D Penalty Under 65?

If you qualify for Medicare due to disability but delay Medicare Part D enrollment, you will incur the Medicare Part D penalty when you pick up the drug coverage before 65. To avoid the Medicare Part D penalty, you must be aware of your Medicare eligibility status, know your Medicare Part A effective date, and sign up for Medicare Part D as soon as possible.

Being under 65 will not protect you from Medicare’s late enrollment penalties. If you do not have creditable medical or drug coverage after reaching eligibility, you will need to pay the Medicare Part B and Part D penalties, respectively. So, do not delay your enrollment.

However, when you turn 65, any penalty you incur will be voided, so you will have a clean slate. You will also get a second opportunity to enroll in Medicare Part D to avoid future penalties.

Medicare Part D Late Enrollment Penalty Calculator

The Medicare Part D penalty is based on the number of months you were eligible for Original Medicare without having creditable prescription drug coverage. For each month you go without Medicare Part D or other creditable coverage, you will pay an additional premium of 1% of the current national base beneficiary premium – meaning the average cost of Medicare Part D.

Part Penalty Calculator

Additionally, the Medicare Part D penalty is not a one-time penalty. You will pay the penalty monthly for as long as you have Medicare prescription coverage. The Medicare Part D penalty is rounded to the nearest 10¢ and added to the premium you pay for your Medicare Part D plan.

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Since the Medicare Part D penalty is always based on the current year’s national base premium, it is subject to change or increase each year. The Medicare Part D penalty calculation can be challenging to calculate. So, we provided an example to show how it works.

Suppose your Initial Enrollment Period ended, and you waited 24 months to sign up for Part D drug coverage. Your Medicare Part D penalty would be 24 percent of the national base premium, one percent for each of the 24 months you waited.

The average monthly premium for a Medicare Part D plan in 2024 is $34.70. Thus, the calculation is $34.70 x .24 = $8.68 rounded to the nearest 10¢, making the penalty $8.70.

So, you pay your Medicare Part D premium plus monthly penalty charges. The best way to avoid paying the Medicare Part D penalty is to enroll in a prescription drug plan as soon as you become Medicare-eligible.

Is There a Medicare Part D Penalty Cap?

Since this penalty did not start until 2006, your penalty can only start from that year at the earliest. Otherwise, there is no cap on the Medicare Part D penalty, so if you go 100 months without creditable drug coverage after becoming Medicare-eligible, you will pay your plan’s premium plus the national average Medicare Part D premium.

Medicare Part D Penalty Exceptions

There are a few exceptions to paying the Medicare Part D penalty. You may not have to pay any Part D penalty fees if you:

  • Have creditable drug coverage through a source besides Medicare
  • Qualify for Extra Help
  • Qualify for a state pharmaceutical assistance program (SPAP)
  • Can prove that you received false or misleading information about whether your current or previous drug coverage was creditable.

Medicare Part D Penalty Appeal

Unfortunately, there is no surefire way to eliminate your Medicare Part D penalty. However,  you can appeal the decision. All you must do is complete a reconsideration request form. This form is available on CMS.gov.

Additionally, if you qualify for Extra Help, you may be eligible for Medicare Part D penalty assistance. Some lower-income beneficiaries have the penalty waived altogether. You can contact Social Security to apply for Medicare Extra Help.

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How to Avoid the Medicare Part D Penalty

In choosing Medicare coverage, it is crucial to plan ahead to avoid penalties and minimize your costs. At MedicareFAQ, we can help ensure our clients enroll in a Medicare Part D plan on time.

We research the top Part D plans in your area, help determine your needs, and provide quotes for your best coverage options. Call us at the number above, or complete our rate form online to begin your side-by-side plan comparison today.

Sources

MedicareFAQ is dedicated to providing you with authentic and trustworthy Medicare information. We have strict sourcing guidelines and work diligently to serve our readers with accurate and up-to-date content.

Kayla Hopkins

Kayla Hopkins

Content Editor
Kayla Hopkins is an accomplished writer and Medicare guru serving as the Editor of MedicareFAQ.com. Upon completing her Communications degree from Ohio University, Kayla dedicated her time to understanding the ever-evolving landscape of healthcare. With her extensive background as a Licensed Medicare Insurance Agent, she brings a wealth of knowledge and expertise to her writing.
Ashlee Zareczny

Ashlee Zareczny

Compliance Manager
Ashlee Zareczny is the Compliance Manager for MedicareFAQ. As a licensed Medicare agent in all 50 states, she is dedicated to educating those eligible for Medicare by providing the necessary resources and tools. Additionally, Ashlee trains new and tenured Medicare agents on CMS compliance guidelines. Ashlee is a Medicare expert who specializes in Medicare Supplement, Medicare Advantage, and Medicare Part D education.

36 thoughts on "Medicare Part D Penalty"

  1. I had a LEP and qualified for extra help. Now I earn more and will lose extra help. Will the LEP fine come back?

    1. Great question! Enrollment penalties are covered by extra help. If you lose extra help, you will be required to cover your late enrollment penalty.

  2. When did Medicare first offer a drug plan ( Part D)? For LEP penalty purposes I applied for Part B in 2008

    1. David, thank you for reaching out! If you accrue a Part D penalty, it never goes away. As long as you have Part D, you will be responsible for the penalty as well as your plan’s premium.

  3. At this time is there any plans available for me. Due a miss understanding on my part & the computer filing I lost out on the time frame
    What will my penalty be for late filling with Medicare for 72 months?

    1. Sandy, unfortunately there is not an enrollment period for Part D plans open at this time. The Annual Election period to enroll in a drug plan is October 15 through December 7. Consequently, the Part D penalty is 1% of the “national base beneficiary premium” ($33.37 in 2022) times the number of full, uncovered months you didn’t have Part D or creditable coverage. To get an accurate amount, it is best to reach out to your local Social Security office, as they assess the penalty.

  4. My father is switching to a medicare advantage plan with drug coverage. He is 85 years old and has never had Part D coverage ( he doesn’t take any prescriptions other than Lisinopril which he pays for out of pocket.
    is he going to be required to pay a penalty all the way back to 2006? That would be a 185% penalty of about $650-$700 bucks

    1. Hi Daniel – as long as your father’s Medicare Advantage plan included prescription drug coverage, it is creditable for Part D. He won’t be subject to the penalty for as long as he had creditable prescription drug coverage.

    2. I know the feeling. I’m 80 and just signed up for Plan D. I have a penalty set for 187 months. I am fortunate at this moment in time that I don’t need Plan D now, but at my age I don’t dare wait. My premium is going to be approximately $75.00 a month when my drugs at this time cost me less than $25.00 a month.

  5. Hello. My father is currently enrolled in Part A, and just got approved for Part B under the special enrollment period. He currently has COBRA for prescription drug coverage until the end of 2022. How can I confirm that the coverage is “creditable” so he can enroll in Part D for 2023 onward without the penalty? Thanks.

    1. Hi San – COBRA is not creditable coverage for Parts A and B and is usually not creditable for Part D. We would recommend he sign up for Part D prescription drug coverage during the Annual Enrollment Period, which is currently going on and ends on December 7.

  6. My question is a pretty simple one. When I enroll in Medicare Part D, can the payment be deducted from my SS check, or is it paid directly to the carrier?

  7. 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

    1. Hi Karen! Yes, any penalties you accrued prior to turning 65 will go away, or reset to zero, when you turn 65.

  8. 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.

    2. I asked the same question. Why the penalty? Purpose? I lost my Part D accidentally. I did not know this until four months later. Like a lifetime punishment now.

  9. 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.

  10. 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!

  11. 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)

  12. 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.

  13. 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!

  14. 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!

  15. 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.

  16. 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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