How much is the late enrollment penalty?

The amount of the late enrollment penalty is based on the number of months that you go without creditable prescription drug coverage. To determine the penalty amount, multiply 1% of the “national base beneficiary premium” by the total number of full months that you were eligible to enroll in a Medicare drug plan but did not, and you also had no other creditable drug coverage. Take the amount and rounded to the nearest tenth. That amount is then added to your Medicare prescription drug coverage premium to compute the final amount. The “national base beneficiary premium” may increase year by year. With each increase, your penalty will also increase. The advantages of joining a Medicare drug prescription drug coverage plan when you first become eligible are clear.


Study this example:


Mrs. Jones had a deadline of June 2013 to join a prescription drug coverage plan, and she missed and has no creditable coverage from any other source. Mrs. Jones waited until the 2015 Open Enrollment to join. Her coverage began on January 2016.


Mrs. Jones will have to pay a penalty of 30% commencing on January of 2016 because she was without creditable coverage from August 2014 through December 2017. That is a total of 30 months. She will pay 1% for each of month that she went without creditable coverage. In 2016, the national base beneficiary premium was $34.10. We take the number of months that Mrs. Jones went without creditable coverage (30) and multiply it by the national base beneficiary premium ($34.10). This gives us $10.23 (30 X $34.10 = $10.23). The answer is then rounded to the nearest $.10 (tenth), which brings us to $10.20. So, starting on January of 2016, Mrs. Jones will have to pay $10.20 each month on top her plan’s monthly premium.  She will pay this penalty for as long as she has Part D coverage. This amount may go increase year after year.

Frequently Asked Questions (FAQs)