The late enrollment penalty is an amount added to your Medicare Part D premium. You may owe a late enrollment penalty if, at any time after your initial enrollment period is over, there's a period of 63 or more days in a row when you don't have Part D or other creditable prescription drug coverage. Learn how to avoid the late enrollment penalty.
If you get Extra Help, you don't pay the late enrollment penalty.
How much is the Part D 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" ($33.13 in 2015) times the number of full, uncovered months you were eligible but didn't join a Medicare Prescription 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 each year.
Your plan will tell you if you 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. 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.
Mrs. Martin didn't join a drug plan when she was first eligible—by July 2012. She doesn't have prescription drug coverage from any other source. She joined a Medicare drug plan during the 2014 Open Enrollment Period, and her coverage began on January 1, 2015.
Since Mrs. Martin was without creditable prescription drug coverage from August 2012–December 2014, her penalty in 2015 is 29% (1% for each of the 29 months) of $33.13 (the national base beneficiary premium for 2015), which is $9.61. The monthly penalty is rounded to the nearest $.10, so she'll be charged $9.60 each month in addition to her plan's monthly premium in 2015.
Here's the math:
.29 (29% penalty) × $33.13 (2015 base beneficiary premium) = $9.61
$9.61 (rounded to the nearest $0.10) = $9.60
$9.60 = Mrs. Martin's monthly late enrollment penalty for 2015