How Your Medicare Part D Late-Enrollment Penalty Is Calculated

Last Updated : 12/17/20192 min read

Summary: Medicare Part D is prescription drug coverage. It’s optional, but if you delay enrolling in a Medicare Part D Prescription Drug Plan, you may be charged a late-enrollment penalty if you decide to enroll later.

Here is how that penalty is calculated and assessed:

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  • When you enroll in a Medicare Part D Prescription Drug Plan, the plan will calculate the number of full months you were eligible to enroll in Part D prescription drug coverage, but decided not to enroll and went without other creditable prescription drug coverage (insurance that is as good as Medicare Part D) for 63 consecutive days or more.
  • The Part D Prescription Drug Plan then provides that information to the Medicare program.
  • Medicare then determines the late-enrollment penalty by multiplying 1% of the national base beneficiary premium by the number of months you were uncovered. Medicare rounds that number to the nearest $0.10.
  • This amount is added to your Part D Prescription Drug Plan monthly premium.

The national base premium ($32.74 in 2020) may change each year, so your Medicare Part D late-enrollment penalty may vary from year to year.

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Note: If you enroll in a Medicare Prescription Drug Plan when you’re first eligible for Medicare, you won’t be subject to a late-enrollment penalty. You also won’t face the penalty if you’ve been continuously enrolled in creditable prescription drug coverage (described above) without any gap longer than 63 days in a row.

Please be aware that you may wind up paying this penalty for as long as you’re enrolled in a Medicare Prescription Drug Plan. There are some exceptions to this. For example, say a disabled individual under the age of 65 was assessed a late-enrollment penalty. Upon turning age 65, that individual would have a subsequent Initial Enrollment Period. And, if he or she is still enrolled in the Part D Prescription Drug Plan, the late-enrollment penalty would be eliminated going forward.

Individuals who qualify for Medicare’s Low-Income Subsidy, also known as the Extra Help program, are exempt from a Part D late-enrollment penalty.

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