Understanding and Avoiding the Part D Late Enrollment Penalty

This post is about how you can face a late enrollment penalty if you do not sign up for Medicare Part D when you are eligible

What is the Part D Late Enrollment Penalty? Its an amount that’s added to your part D premium. You may receive the penalty any time after your initial enrollment period is over or there is a period of 63 or more days in a row when you don’t have Part D or another form of creditable prescription drug coverage. A creditable prescription drug coverage plan is one that covers at least as much as Medicare’s standard prescription drug coverage.

There are three ways to avoid the penalty:

  • Join a Medicare Drug plan when you are first eligible
  • Don’t go 63 or more days in a row without a Medicare drug plan or another creditable prescription drug coverage plan
  • Tell your plan about any drug coverage you’ve had if they ask about

The cost of the penalty depends on how long you go without creditable prescription drug coverage. Your Medicare plan will let you know if you owe a penalty once you join a Medicare drug plan.

The penalty is calculated by multiplying 1% of the national base beneficiary premium times the number of full, uncovered months you were eligible but didn’t join a Medicare plan and went without a different creditable prescription coverage.

Take for example the national base beneficiary premium of $31.17 in 2013. If you had been eligible for a Medicare drug plan for 15 months, your penalty would be 15% (1% for each of the 15 months) of $31.17, which comes out to be $4.68. This amount will be added each month in addition to your monthly premium in 2013.

If you have questions choosing a Medicare plan that offers the coverage you need, contact us at MedicareSolutions at 1-800-328-7305 where a licensed sales agent will immediately assist you.