The Medicare Part D penalty is a permanent increase to your premiums for each month you've gone without prescription drug coverage.
Updated Mar 25, 2024 · 3 min read Written by Alex Rosenberg Lead Writer Alex Rosenberg
Lead Writer | Medicare, health care, legislation
Alex Rosenberg is a NerdWallet writer focusing on Medicare and information technology. He has more than 10 years of experience researching and writing about health care, insurance, technology, data privacy and public policy. His research has supported lawmakers in the Wisconsin State Legislature as well as health systems and national health authorities in the U.S. and more than 10 other countries. He is based in Eau Claire, Wisconsin.
Assigning Editor Holly Carey
Assigning Editor | Medicare
Holly Carey joined NerdWallet in 2021 as an editor on the team responsible for expanding content to additional topics within personal finance. She currently leads the Medicare team. Previously, Holly wrote and edited content and developed digital media strategies as a public affairs officer for the U.S. Navy. She is based in Virginia Beach, Virginia.
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Nerdy takeawaysIt’s important to sign up for a Medicare Part D prescription drug plan when you enroll in Original Medicare or Medicare Advantage . If you wait too long and sign up later, you’ll face a late enrollment penalty that permanently increases your Part D premiums.
The penalty also applies if you drop your Medicare Part D plan and go without prescription drug coverage for too long.
Here’s what you need to know about the Medicare Part D late enrollment penalty and how to avoid it.
You’ll start to owe a late enrollment penalty if you go at least 63 days without sufficient prescription drug coverage after the end of your initial Medicare enrollment period (when you’re first eligible for Medicare ) [0]
Centers for Medicare & Medicaid Services . Part D Late Enrollment Penalty. Accessed Mar 20, 2024.The initial enrollment period lasts for seven months around your 65th birthday: the three months before your birthday month, your birthday month and the three months after [0]
Centers for Medicare & Medicaid Services . When Does Medicare Coverage Start?. Accessed Mar 20, 2024.
Your best bet to avoid the penalty is to sign up for Medicare Part D or a Medicare Advantage plan with prescription drug coverage during your initial enrollment period and stay enrolled consistently afterward.
You should maintain consistent Part D coverage, but it doesn’t have to be the same plan. You don’t risk the late enrollment penalty if you change plans during Medicare open enrollment or Medicare Advantage open enrollment .
Your Medicare Part D late enrollment penalty gets higher the longer you go without Medicare Part D or other creditable prescription drug coverage.
The penalty is calculated in part based on the national base beneficiary premium for Medicare Part D: $34.70 in 2024 [0]
Centers for Medicare & Medicaid Services . CMS Releases 2024 Projected Medicare Part D Premium and Bid Information. Accessed Mar 20, 2024.
The Medicare Part D late enrollment penalty is 1% of that national base beneficiary premium for each full month that you didn’t have Medicare Part D or other creditable prescription drug coverage, rounded to the nearest 10 cents.
If you weren’t covered for two years, for example, that’s 24 months. So you would owe 24% of $34.70, or $8.30 (rounded to the nearest 10 cents), each month for 2024, in addition to your premiums for either your Medicare Part D plan or Medicare Advantage plan with prescription drug coverage.
It’s permanent. You’ll continue to owe the penalty with your premiums if you have Medicare Part D or a Medicare Advantage plan with prescription drug coverage [0]
Centers for Medicare & Medicaid Services . Avoid Late Enrollment Penalties. Accessed Mar 20, 2024.Because the penalty is tied to the national base beneficiary premium, it can change yearly. So even if you don’t go without Part D coverage again after you incur the penalty, your penalty amount could go up as the national base beneficiary premium rises.
MEDICARE PART D covers outpatient prescription drugs for people on Medicare. Compare options from our Medicare Part D roundup .
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If you wait to sign up for Medicare Part D because you already have equivalent or better prescription drug insurance, such as coverage from an employer or a union, you won’t owe the Part D late enrollment penalty [0]
Centers for Medicare & Medicaid Services . 3 Ways to Avoid The Part D Late Enrollment Penalty. Accessed Mar 20, 2024.
For that other insurance to count, your non-Medicare prescription drug coverage has to qualify as “creditable prescription drug coverage” because it pays for at least as much as Medicare’s standard prescription drug coverage, on average.
You don’t need to do the math to determine whether your non-Medicare prescription drug coverage qualifies. Plans must tell you every year whether or not your coverage counts as creditable prescription drug coverage.
Hang on to documentation from your non-Medicare coverage in case you need to prove that you had creditable coverage when it comes time to sign up for Medicare Part D or if you’re erroneously charged a late enrollment penalty.
Once your drug plan informs you that you will be charged a late enrollment penalty, you have 60 days to ask for reconsideration.
Your plan will provide information on how to request reconsideration, including the evidence you might need to show.
Most reconsideration decisions happen within 90 days [0]
Centers for Medicare & Medicaid Services . Part D Late Enrollment Penalty. Accessed Mar 20, 2024.. Until the decision is made, you need to keep paying the penalty, or you might be dropped from your plan.
If the reconsideration decision says you don’t owe the penalty, you can receive a refund for the penalty you paid when you shouldn’t have needed to.
If you have additional questions about Medicare, visit Medicare.gov or call 800-MEDICARE (800-633-4227, TTY 877-486-2048).
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Alex is a NerdWallet writer focusing on Medicare and information technology. He has written about health, tech, and public policy for over 10 years. See full bio.
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