One of the most important things that Medicare beneficiaries need know is that there is a late-enrollment penalty for Medicare Part A, Part B, and Part D plans. This guide will provide you everything you need to know about the Medicare Part D penalty and how to avoid it.
Medicare Part D Penalty: What is it?
The Medicare Part D late enrollment penalty (also referred as “LEP”) is a specific dollar amount that is added to your Part D monthly premium. If you have enrolled in a Medicare Part D drug plan, you may be responsible to pay an enrollment penalty. This is typically added to your monthly Part D premium. In other words, you may need to pay a Part D monthly premium that’s higher than if you weren’t penalized.
This penalty will be added for as long as you have a Medicare Part D drug plan. The penalty remains even if you change drug plans or companies.
How the Penalty works
The late enrollment Part D penalty will generally happen for you if the following occurs:
- If your Initial Enrollment Period (IEP) has ended
- And you go 63 days or more without continuous coverage
- And you go without one of the following 4 situations:
Creditable Coverage
Creditable prescription drug coverage (for example, drug coverage through your employer).
Different Plan
Another Medicare plan that provides prescription drug coverage (like a Medicare Advantage Plan).
Extra Help
If you qualify for the Extra Help program
Part D
You have a Medicare Part D Drug plan.
EXCEPTION
If you happen to be under 65 and enrolled in Medicare because of a disability and you’re currently paying a premium penalty, as soon as you turn 65 you will not have to pay the penalty.
What if you currently don’t take prescription drugs?
You may want to get a cheap plan even if you don’t have any current medications. In this video, we go over what happens when you don’t buy a Part D drug plan when you’re first eligible for Medicare.
How much are the part d penalties?
How much will you pay for your Part D penalty? The cost will depend on how long you were without a Part D plan (or creditable drug coverage).
Medicare will calculate your late enrollment penalty by taking the 1% penalty rate of the “national base beneficiary premium” and multiplying it by the number of full, uncovered months that you weren’t enrolled in a Part D plan (or creditable drug coverage).
The national base beneficiary premium in 2021 is $33.06.
Your final amount is then rounded to the nearest $0.10 and will be added to your monthly Part D drug premium.
Example
Here is an example of a common Part D penalty.
Let’s suppose you started shopping and purchased your Medicare Part D Prescription Drug Plan in 2021, nine months after your Initial Enrollment Period (IEP) ended.
One percent of the “national base beneficiary premium of $33.06 is $0.33 which will be multiplied by 9 months.
- $0.33 x 9 = $2.97
- $2.97 rounded to the nearest $0.10 = $3.00
So, the late enrollment penalty would be about $3.00 and it would be added to the Medicare Part D premium every month. The “national base beneficiary premium” can increase every. Just know that may result in your penalty amount also increasing each year.
Quick Calculation
In 2021, you will multiply the number of months you didn’t have creditable coverage by $.33.
part d penalty FAQ
For more information about Medicare enrollment and penalties, see When to sign up for Medicare benefits and Medicare Enrollment – What you need to know
Michael Quinn is an independent licensed insurance agent with a passion for helping others navigate the complex world of Medicare insurance. With over a decade of experience in the field, Michael has established himself as a trusted advisor to countless individuals seeking guidance on their healthcare coverage options.
In 2013, Michael obtained his license as an insurance agent, laying the foundation for his successful career in the industry. Prior to that, he earned his Masters Degree in Communicative Disorders from the University of Central Florida, which equipped him with strong communication and interpersonal skills.
Driven by a genuine desire to make a positive impact on people's lives, Michael co-founded REMEDIGAP in 2013. It was created as a dedicated platform that aims to educate individuals about Medicare insurance. Through REMEDIGAP, Michael provides comprehensive resources and unbiased information to empower individuals to make informed decisions about their healthcare coverage.
With his extensive knowledge and expertise, Michael has been able to guide thousands of individuals towards finding the most suitable Medicare insurance plans tailored to their unique needs. His dedication to his clients' well-being, coupled with his passion for simplifying complex insurance concepts, has earned him a reputation as a compassionate and reliable advisor.
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