The late enrollment penalty is an amount that's permanently added to your Medicare drug coverage (Part D) premium. You may owe a late enrollment penalty if at any time after your Initial Enrollment Period is over, there's a period of 63 or more days in a row when you don't have Medicare drug coverage or othercreditable prescription drug coverage.
You’ll generally have to pay the penalty for as long as you have Medicare drug coverage.
What is considered credible prescription drug coverage?Prescription drug coverage (for example, from an employer or union) that's expected to pay, on average, at least as much as Medicare's standard prescription drug coverage. People who have this kind of coverage when they become eligible for Medicare can generally keep that coverage without paying a penalty, if they decide to enroll in Medicare prescription drug coverage later.
Note - If you get Extra Help, you don't pay the late enrollment penalty.
How much is the Part D penalty?
The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage.
Medicare calculates the penalty by multiplying 1% of the "national base beneficiary premium" ($33.37 in 2022) times the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.
The national base beneficiary premium may change each year, so your penalty amount may also change each year.
Mrs. Martinez has Medicare, and her first chance to get Medicare drug coverage (during her Initial Enrollment Period) ended on July 31, 2018. She doesn’t have prescription drug coverage from any other source. She didn’t join a Medicare drug plan by July 31, 2018, and instead joined during the Open Enrollment Period that ended December 7, 2020. Her Medicare drug coverage started January 1, 2021.
Since Mrs. Martinez was without creditable prescription drug coverage from August 2018–December 2020, her penalty in 2021 is 29% (1% for each of the 29 months) of $33.37 (the national base beneficiary premium) or $9.68 each month. Since the monthly penalty is always rounded to the nearest $0.10, she will pay $9.70 each month in addition to her plan’s monthly premium.
$9.70 = Mrs. Martinez's monthly late enrollment penalty for 2021
How do I know if I owe a penalty?
After you join a Medicare drug plan, the plan will tell you if you owe a penalty and what your premium will be. In general, you'll have to pay this penalty for as long as you have a Medicare drug plan.
What if I don't agree with the late enrollment penalty?
You may be able to ask for a "reconsideration." Your drug plan will send information about how to request a reconsideration.
Complete the form, and return it to the address or fax number listed on the form. You must do this within 60 days from the date on the letter telling you that you owe a late enrollment penalty. Also send any proof that supports your case, like a copy of your notice of creditable prescription drug coverage from an employer or union plan.
Do I have to pay the penalty even if I don't agree with it?
By law, the late enrollment penalty is part of the premium, so you must pay the penalty with the premium. You must also pay the penalty even if you've asked for a reconsideration. Medicare drug plans can disenroll members who don't pay their premiums, including the late enrollment penalty portion of the premium.