What is the Part D Enrollment Penalty?
The late enrollment penalty is an amount added to your Part D premium. You may owe a late enrollment penalty if, at any time after your initial enrollment period is over, there is a period of 63 or more days in a row when you do not have Part D or other creditable prescription drug coverage.
Note: If you get Extra Help, you don’t pay a late enrollment penalty.
3 Ways to Avoid the Late Enrollment Penalty:
- Join a Medicare drug plan when you’re first eligible. You won’t have to pay a penalty, even if you’ve never had prescription drug coverage before.
- Don’t go 63 days or more in a row without a Medicare drug plan or other creditable coverage. Creditable prescription drug coverage could include drug coverage from a current or former employer or union, TRICARE, Indian Health Service, the Department of Veterans Affairs, or other health insurance coverage. Your plan must tell you each year if your drug coverage is creditable coverage. You may get this information in a letter or in a newsletter from the plan. Keep this information, because you may need it if you join a Medicare drug plan later.
- Tell your plan about any drug coverage you had if they ask about it. When you join a Medicare drug plan, the plan will send you a letter if it believes you went at least 63 days in a row without other creditable prescription drug coverage. The letter will include a form asking about any drug coverage you had. Complete the form and return it to your drug plan by the deadline in the letter. If you do not tell the plan about your creditable drug coverage, you may have to pay a penalty.
How much is the Late Enrollment Penalty?
The cost of the late enrollment penalty depends on how long you went without creditable prescription drug coverage.
The late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($32.34 in 2011) times the number of full, uncovered months you were eligible but didn’t join a Medicare drug plan and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium.
The national base beneficiary premium may increase each year, so the penalty amount may also increase every year.
Will my plan notify me if I have a Part D Enrollment Penalty?
After you join a Medicare drug plan, the plan will tell you if you owe a penalty, and what your premium will be. You may have to pay this penalty for as long as you have a Medicare drug plan. If you had to pay a Part D late enrollment penalty before you turned 65, the penalty will be waived once you reach 65.
Example: Mrs. Jones didn’t join when she was first eligible-by May 15, 2007. She joined a Medicare drug plan between October 15-December 7, 2010, for an effective date of January 1, 2011. Since Mrs. Jones didn’t join when she was first eligible and went without other creditable drug coverage for 43 months (June 2007-December 2010), she is charged a monthly penalty of $13.90 in 2011 ($32.34 national base rate premium X .01penalty rate X 43 months = $13.90). She pays this late enrollment penalty monthly in addition to her plan’s monthly premium.
What if I Don’t Agree With my Part D Enrollment Penalty?
- If you don’t agree with your late enrollment penalty, you can ask Medicare for a review or reconsideration. You’ll need to fill out a reconsideration request form (that your Medicare drug plan will send you), and you’ll have the chance to provide proof that supports your case, such as information about previous creditable prescription drug coverage.
- If you need help with figuring out your Enrollment Penalty, call your Medicare plan. You can also contact your State Health Insurance Assistance Program (SHIP).