Part D Late Enrollment Penalty

The Part D Late Enrollment Penalty is an amount that is permanently charged to you related to your Medicare drug coverage. (The penalty is paid to Medicare, not the drug plan). You may owe a late enrollment penalty if at any time after your Initial Enrollment Period (IEP) is over, there is a period of 63 or more days in a row when you don’t have Medicare Part D drug coverage or other creditable prescription drug coverage. You will generally have to pay the penalty for as long as you have Medicare drug coverage. (For more information on Part D Late Enrollment Penalty, please click HERE).

Ways to avoid the Part D Late Enrollment Penalty

Enroll in Medicare drug coverage when you’re first eligible.

Even if you don’t take any drugs now, you should consider enrolling in a Part D Prescription drug plan (PDP) or a Medicare Advantage Plan with drug coverage included (MAPD) to avoid a penalty. You may be able to find a drug plan that meets your needs for as little as $7.00/mo. Getting an inexpensive drug plan now will help you avoid a Part D Drug penalty in the future.                                

Enroll in Medicare drug coverage if you lose other creditable coverage.

 Creditable prescription drug coverage could include drug coverage from a current or former employer or union, TRICARE, Indian Health Service, the Department of Veterans Affairs or individual health insurance. Your plan must tell you each year if your non-Medicare drug coverage is “creditable” coverage. If you go 63 days or more in a row without Medicare drug coverage or other creditable drug coverage, you may have to pay a penalty when you sign up for a Medicare drug plan in the future.

IMPORTANT! Keep records showing when you had other creditable drug coverage, and show your Medicare Part D plan when they ask about it.

If you don’t tell your Medicare drug plan about your previous creditable drug coverage, you may have to pay a penalty for as long as you have a Medicare drug plan.                                                                                                                                                

How much more will I pay for a Part D Late Enrollment Penalty? The cost of the late enrollment penalty depends on how long you didn’t have creditable prescription drug coverage. Currently, the late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” (approximately $33.00/mo.) by the number of full, uncovered months that you were eligible but didn’t enroll in Medicare drug coverage and went without other “creditable” drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium. Since the “national base beneficiary premium” may increase each year, the penalty amount may also increase each year. After you enroll in Medicare drug coverage, the plan will tell you if you owe a penalty and what your premium will be.

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