What’s the late enrollment penalty for Medicare Part D, and when does it take effect?

Suppose you don’t enroll in a Part D prescription drug plan or a Medicare Advantage plan that includes Part D coverage when you are first eligible for Medicare. In that case, you may be assessed something called the Part D late enrollment penalty. The late enrollment penalty is an amount is added to your Part D premium, and once it is incurred, it never goes away. You will be assessed a late enrollment penalty if, at any point, after your Initial Enrollment Period is over, you don’t have Part D coverage or other creditable prescription drug coverage for 63 or more days in a row.

The amount of the Part D late enrollment penalty depends on how long you did not have Part D or creditable prescription drug coverage. The amount is calculated by multiplying 1% of the “national base beneficiary premium” ($33.06 in 2021) 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 can change every year, and as a result, the penalty amount can change each year.

The Part D penalty takes effect as soon as you enroll in a Part D Prescription Drug plan after a break of 63 days or more.

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