The Medicare Part D late enrollment penalty is a surcharge added to your Medicare Part D (prescription drug plan) monthly premium. Medicare gives this penalty to people who don’t sign up for Part D drug coverage before Medicare enrollment period deadlines. It’s not a 1-time fee, and in most cases, it’s permanent.

Let’s explore some details of the Part D late enrollment penalty.

How to avoid the Part D late enrollment penalty

Nobody likes paying fees or penalties. Here are 3 ways to avoid the Part D late enrollment penalty and save money:1

  1. Enroll in Medicare drug coverage when you’re first eligible—You won’t pay any penalties if you sign up for Medicare Part D coverage during your Initial Enrollment Period (IEP). Your IEP is when you can first sign up for Part A (Hospital Insurance) and Part B (Medical Insurance), and it starts 3 months before you turn 65 and ends 3 months after the month you turn 65.
  2. Don’t go 63 days or more without a drug plan—If you had and lost drug coverage from a creditable provider (current or former employer, TRICARE, individual health insurance coverage, etc.) you must join a new Medicare Part D drug plan in fewer than 63 days. If not, you may pay a penalty if you sign up for Medicare drug coverage after 63 days.
  3. Keep records of your prior drug coverage—When you join a new drug plan, you’ll need proof of your previous creditable prescription drug coverage to avoid a penalty. Your records can also prove it’s been fewer than 63 days since you’ve been covered.

Note: If you get Extra Help, you don’t have to pay the Part D late enrollment penalty.

How is the Part D penalty calculated?

Medicare calculates the Part D penalty by multiplying 1% of the “national base beneficiary premium” ($32.74 in 2023, down from $33.37 in 2022) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The final amount is rounded to the nearest $.10 and added to your monthly Part D premium.2

Note: The national base beneficiary premium may change each year, so your penalty amount may also change each year.

How long does the Part D penalty last?

In most cases, the Part D penalty is permanent. You’ll generally have to pay the penalty as long as you have Medicare drug coverage.

Even if you choose to join another Medicare Part D plan, you’ll still pay the penalty with the new plan. This includes plans with a $0 monthly premium.3

Can I dispute a Medicare Part D penalty?

If you don’t agree with the penalty, you may be able to ask Medicare to review its decision. This is called a reconsideration. Your Part D drug plan can send you information about how to request a reconsideration, including the official form.

To get a review of your case, you need to complete the form and send it to the address or fax number listed on the form. You must mail or fax it within 60 days from the date on the letter stating you had to pay a Part D late enrollment penalty. You should also send any proof that supports your case, like information about previous creditable coverage.

Medicare’s contractor typically makes reconsideration decisions within 90 days. If Medicare’s contractor decides that all or part of your late enrollment penalty is wrong, the contractor will send you and your drug plan a letter explaining its decision. Your Medicare drug plan will remove or reduce your late enrollment penalty and let you know if you’ll get a refund. If Medicare’s contractor decides that your late enrollment penalty is correct, the contractor will send you a letter explaining the decision and you must continue paying the penalty.4

The bottom line

The best way to avoid the Part D penalty is to sign up for Medicare drug coverage during your IEP. For information on signing up, check out how to enroll in a Medicare Part D prescription drug plan.

 

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  1. “3 ways to avoid the Part D late enrollment penalty,” Medicare.gov, last accessed November 2, 2022, https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/part-d-late-enrollment-penalty/3-ways-to-avoid-the-part-d-late-enrollment-penalty.
  2. “Part D late enrollment penalty,” Medicare.gov, last accessed November 2, 2022, https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/part-d-late-enrollment-penalty.
  3. “The Part D Late Enrollment Penalty,” Centers for Medicare & Medicaid Services, last accessed November 2, 2022, https://www.cms.gov/Outreach-and-Education/Outreach/Partnerships/downloads/11222-P.pdf, PDF.
  4. “Part D late enrollment penalty.”