Understanding the Part D Late Enrollment Penalty

The late enrollment penalty is an amount added to your Medicare Part D monthly premium. You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your Initial Enrollment Period is over, you go without one of these:

You don’t pay the late enrollment penalty if you receive Medicare Extra Help.

Roman Brokers Insurance in Mesa, AZ will help you compare all of the plans available in your area during open enrollment. Contact Dan at Roman Brokers at 480-834-7447 for more information about picking a plan that best suits your needs.

How Much is the Part D Penalty?

calculating Medicare Part D penaltiesThe 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” ($32.74 in 2020) times the number of full, uncovered months you did not 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. Munoz is currently eligible for Medicare, and her Initial Enrollment Period ended on May 31, 2017. She doesn’t have prescription drug coverage from any other source. She didn’t join by May 31, 2017, and instead joined during the Annual Enrollment Period (AEP) that ended December 7, 2019. Her drug coverage was effective January 1, 2020.

Since Mrs. Munoz was without creditable prescription drug coverage from June 2017–December 2019, her penalty in 2020 was 31% (1% for each of the 31 months) of $32.74 (the national base beneficiary premium for 2020) or $10.15. Since the monthly penalty is always rounded to the nearest $0.10, she paid $10.20 each month in addition to her plan’s monthly premium.

How this is Calculated:

.31 (31% penalty) × $32.74 (2020 base beneficiary premium) = $10.15
$10.15 rounded to the nearest $0.10 = $10.20
$10.20 = Mrs. Munoz’s monthly late enrollment penalty for 2020

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. However, if you receive Medicare Extra Help, you don’t pay the late enrollment penalty.

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 asked for a reconsideration. Medicare drug plans can dis-enroll members who don’t pay their premiums, including the late enrollment penalty portion of the premium.

How Soon Will I Get a Reconsideration Decision?

Medicare’s contractor makes reconsideration decisions typically within 90 days. The contractor will try to make a decision as quickly as possible. However, you may request an extension. Or, for good cause, Medicare’s contractor may take an additional 14 days to resolve your case.

What Happens if Medicare Decides the Penalty is Wrong?

If Medicare’s contractor decides that all or part of your late enrollment penalty is wrong, the Medicare 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. The plan will send you a letter that shows the correct premium amount and explains whether you’ll get a refund.

What Happens if Medicare Decides the Penalty is Correct?

If Medicare’s contractor decides that your late enrollment penalty is correct, the Medicare contractor will send you a letter explaining the decision, and you must pay the penalty.

3 ways to avoid the Part D late enrollment penalty

1. Join a Medicare drug plan when you first become eligible.

You won’t have to pay a Part D late enrollment penalty, even if you’ve never had prescription drug coverage before.

2. Don’t go 63 days or more in a row without Medicare prescription drug coverage or other creditable drug coverage.

Creditable prescription drug coverage could include drug coverage from a current or former employer or union, TRICARE, Indian Health Services, the Department of Veterans Affairs, CHAMPVA, or other health insurance coverage.

Your prescription drug plan must tell you each year if your drug coverage is creditable coverage. They may send you this information in a letter, or draw your attention to it in a newsletter or other piece of correspondence. Keep this information because you may need it if you join a Medicare drug plan later and want to avoid the Part D late enrollment penalty.

3. Keep records showing when you had creditable drug coverage, and tell your plan about it.

When you join a Medicare drug plan, the plan will check to see if you had creditable drug coverage for 63 days or more in a row. If the plan believes you didn’t, it will send you a letter with a form asking about any drug coverage you had. To avoid a Part D penalty, complete the form and return it to your drug plan by the deadline in the letter. If you don’t tell the plan about your creditable drug coverage, you may have to pay a Medicare Part D late enrollment penalty.

Contact Us to Help You Navigate Your Medicare Options

Roman Brokers Insurance in Mesa AZ represents a wide range of Medicare plans and options that will best suit your specific needs and preferences. Roman Brokers Insurance compares companies and plans for the best possible combinations of quality, cost, coverage and compatibility. A licensed, insured, independent agent will walk you through the process and give a detailed explanation of the differences in each plan.

Contact us today or call or text at 480-834-7447.