Key Takeaways

  • People who do not sign up for Medicare drug coverage when first eligible may face a late enrollment penalty if they later join Part D.

  • This penalty only applies to those who didn't have other drug coverage and don't qualify for Medicare Extra Help.

People who do not sign up for a Part D drug plan when first eligible for Medicare may have to pay a late enrollment penalty if they enroll later on. Generally, an enrollment is considered late if the person did not join within three months after first getting Original Medicare (Parts A & B).

Individuals will not be subject to the late enrollment penalty if they:

  • Are eligible for Extra Help also known as the Part D Low-income Subsidy (LIS).
  • Have other drug coverage called “creditable coverage”, coverage considered as good as Medicare drug coverage, at the time through their job or a spouse’s job, retiree coverage, or the Veterans Administration.

How is the late-enrollment penalty calculated?

The late-enrollment penalty is a monthly add-on premium calculated as 1% of the current national base beneficiary premium ($33.06 in 2021) multiplied by the number of uncovered months, rounded to the nearest ten cents. Each year, the late enrollment penalty is recalculated based on the year's base premium amount.

Can someone with Medicare appeal a Part D late-enrollment penalty?

Part D plan members have a right to appeal decisions they believe to be incorrect about late-enrollment penalties. The letter they receive from the plan telling them about the late-enrollment penalty premium explains how to appeal. The letter includes a form that may be used to file the appeal as well.

When should someone appeal a late-enrollment penalty?

Part D Plan members might want to appeal a plan decision if they believe:

  • They promptly submitted information about other creditable drug coverage, but the information was not taken into consideration;
  • The plan miscalculated the number of months without creditable drug coverage;
  • The end date of the Initial Enrollment Period (IEP) was not correctly identified;
  • They have Part D Extra Help and their late-enrollment penalty premium was not correctly waived; or
  • They failed to enroll in a Part D plan sooner because they did not receive adequate notice that their other drug coverage was not creditable.

Learn more about the late-enrollment penalty and appeals from Medicare.