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What’s the Medicare Part D Late Enrollment Penalty?


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Did you know there’s a Medicare Part D penalty for late enrollment? The penalty is avoidable, so it’s important to understand how it works.

If you are eligible for Medicare Part A and/or Part B, you might want to consider enrolling in a Medicare Part D Prescription Drug Plan even if you currently don’t take prescription medications. Medicare Part D prescription drug coverage is voluntary. Still, you may have to pay a Part D late enrollment penalty if you don’t enroll in a Medicare Prescription Drug Plan when you first become eligible for Medicare – but you decide to enroll later on. When you’re first eligible is during your Initial Enrollment Period (IEP).

A Medicare Prescription Drug Plan can be either a stand-alone Medicare Part D Prescription Drug Plan or a Medicare Advantage Prescription Drug Plan.

What is the Medicare Part D late enrollment penalty?

The Medicare Part D late enrollment penalty is based on the amount of time you were without creditable prescription drug coverage. Creditable coverage means prescription drug coverage that on average is at least as good as Medicare Part D coverage. If you go without creditable prescription drug coverage for 63 days in a row or longer after your Initial Enrollment Period is over , you may have to pay the Medicare Part D penalty if you decide later to enroll in a Medicare Prescription Drug Plan.

The Medicare Part D penalty is a separate fee that can be added to the premium you pay for your Medicare Prescription Drug Plan. Typically the Medicare Part D late enrollment penalty applies for as long as you are enrolled in a Medicare Prescription Drug Plan.

How much could the Medicare Part D late enrollment penalty cost me?

How much the Medicare Part D penalty will cost you depends on how long you did not have creditable prescription drug coverage.

The Medicare Part D penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($32.74 in 2020) by the number of full months that you were eligible for, but didn’t enroll in, a Medicare Prescription Drug Plan and went without other creditable prescription drug coverage. The figure is rounded to the nearest $0.10. For example, if you go 14 months without this coverage and apply for Part D coverage in 2020, the Medicare Part D penalty will be 14%. Fourteen (14) % times $32.74 equals $4.5836. This rounds to $4.60 per month, which would be added to your monthly Part D Prescription Drug Plan premium.

The annual “national base beneficiary premium” may change each year, so the penalty amount may change each year as well.

Are there any exceptions to paying the Medicare Part D late enrollment penalty?

Yes. You usually do not have to pay the Medicare Part D penalty if you receive Extra Help with prescription drug costs.

You may not have to pay the Medicare Part D penalty if you qualify for a Special Enrollment Period (SEP) because you had other creditable prescription drug coverage at the time you turned age 65 or qualified for Medicare because of disability. Examples of creditable coverage might include:

  • Coverage through your employer or union or your spouse’s employer or union
  • Coverage through TRICARE, the Indian Health Service, or the Veterans Administration
  • Retiree coverage

Save the notices of creditable coverage you receive each year from your plan administrator. To avoid the Medicare Part D penalty, you may need to provide evidence of creditable coverage if you decide to enroll in a Medicare Prescription Drug Plan later.

If you have questions about the Medicare Part D penalty or if you wish to learn more about some of the Medicare plans where you live, use the Browse Plans button on this page.

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