The late enrollment penalty for Medicare Part D is an amount added to your Part D premium when you go without creditable prescription drug coverage for 63 or more consecutive days after your initial enrollment period ends.
How to avoid the late enrollment charge
The simplest way to avoid a penalty is to enroll in a Medicare drug plan as soon as you are eligible. Once enrollment is confirmed in a Medicare Part D plan, you generally will not owe a late enrollment penalty even if you never had prior prescription drug coverage. For more details about enrolling and coverage, see Understanding Medicare Part D and Enrollment.
You can also avoid the penalty by maintaining creditable prescription drug coverage and not having a gap of 63 or more days without such coverage. Creditable coverage can include employer or union plans, TRICARE, Veterans Affairs coverage, the Indian Health Service, or certain private plans. Plan sponsors must notify you each year whether their coverage is creditable, so keep those notices in your records. For general information about Medicare and related coverage, see Understanding Medicare, Medicaid, and Life Insurance.
When you join a Medicare drug plan, the plan may send a letter asking about prior prescription coverage if it appears you had a gap of more than 63 days. Complete and return any request for proof of past coverage quickly. If the plan does not receive documentation showing creditable coverage, you may be charged the late enrollment penalty.
How expensive is the Part D penalty?
The penalty has no fixed dollar amount; it depends on how long you went without creditable coverage. It is calculated by multiplying the number of full months without coverage by 1% of the national base beneficiary premium, then rounding to the nearest $0.10 and adding that amount to your monthly Part D premium.
The national base beneficiary premium can change each year, which may affect the penalty amount. Plans will notify you if they add a penalty and indicate the premium you must pay. The penalty typically continues for as long as you have the Part D plan, although there are circumstances and exceptions, and some individuals can have the fee waived.
For assistance with paperwork or to review your options, you can talk to an agent or contact your State Health Insurance Assistance Program for free local help.
Frequently Asked Questions
What counts as creditable prescription drug coverage?
Creditable coverage generally includes employer or union plans, TRICARE, VA, the Indian Health Service, and some private plans that are at least as good as Medicare Part D.
How is the late enrollment penalty calculated?
It is the number of full months without creditable coverage multiplied by 1% of the national base beneficiary premium, rounded to the nearest $0.10 and added to your monthly premium.
Can I appeal or get a penalty removed?
If you believe a penalty was applied in error, you can request a review or fill out a reconsideration form and provide proof of prior creditable coverage.
Where can I get free help understanding my Part D options?
Your State Health Insurance Assistance Program offers free counseling, and licensed agents can also help explain plan choices and deadlines.