What Floridians need to know about the Medicare late enrollment penalty (LEP) for Part D prescription coverage
Part D late enrollment penalty
The late enrollment penalty is an amount that's permanently added to your Medicare drug coverage (Part D) premium. You may incur 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 Medicare drug coverage or other creditable prescription drug coverage. You’ll generally have to pay the penalty for as long as you have Medicare drug coverage.
3 ways to avoid the Part D late enrollment penalty
- Enroll in Medicare drug coverage when you're first eligible.
Even if you don’t take drugs now, you should consider joining a Medicare drug plan or a Medicare Advantage Plan with drug coverage to avoid a penalty. You may be able to find a plan that meets your needs with little to no monthly premiums.
- Enroll in Medicare drug coverage if you lose other creditable coverage.
Creditable Prescription Drug Coveragecould include drug coverage from a current or former employer or union, TRICARE, Indian Health Service, the Department of Veterans Affairs, or individual health insurance coverage. Your plan must tell you each year if your non-Medicare drug coverage is creditable coverage. If you go 63 days or more in a row without Medicare drug coverage or other creditable prescription drug coverage, you may have to pay a penalty if you sign up for Medicare drug coverage later.
- Keep records showing when you had other creditable drug coverage, ant tell your plan when they ask about it.
If you don’t tell your Medicare plan about your previous creditable prescription drug coverage, you may have to pay a penalty for as long as you have Medicare drug coverage.
How much more will I pay for a late enrollment penalty?The cost of the late enrollment penalty depends on how long you didn’t have creditable prescription drug coverage. Currently, the late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($33.37 in 2022, $32.74 in 2023) by the number of full, uncovered months that you were eligible but didn’t enroll in Medicare drug coverage and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium. Since the “national base beneficiary premium” may increase each year, the penalty amount may also increase each year. After you enroll in Medicare drug coverage, the plan will tell you if you owe a penalty and what your premium will be.
| Note |
| 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 Part D or creditable prescription drug coverage.
Medicare calculates the penalty by multiplying 1% of the "national base beneficiary premium" ($33.37 in 2022, $32.74 in 2023) times the number of full, uncovered months you didn't 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 may change each year, so your penalty amount may also change each year.
| Example |
| Mrs. Martinez has Medicare, and her first chance to
get Medicare drug coverage (during her Initial
Enrollment Period) ended on July 31, 2019. She doesn’t
have prescription drug coverage from any other source.
She didn’t join a Medicare drug plan by July 31, 2019,
and instead joined during the Open Enrollment Period
that ended December 7, 2021. Her Medicare drug coverage
started January 1, 2022. 2022 Since Mrs. Martinez was without creditable prescription drug coverage from August 2019–December 2021, her penalty in 2022 is 29% (1% for each of the 29 months) of $33.37 (the national base beneficiary premium for 2022) or $9.68 each month. Since the monthly penalty is always rounded to the nearest $0.10, she will pay $9.70 each month in addition to her plan’s monthly premium. Here's the math:.29 (29% penalty) × $33.37 (2022 base beneficiary premium) = $9.68 $9.68 rounded to the nearest $0.10 = $9.70 $9.70 = Mrs. Martinez's monthly late enrollment penalty for 2022 2023 In 2023, Medicare will recalculate Mrs. Martinez’s penalty using the 2023 base beneficiary premium ($32.74). So, Mrs. Martinez’s new monthly penalty in 2023 will be 29% of $32.74 ($9.49) each month. Since the monthly penalty is always rounded to the nearest $0.10, she will pay $9.50 each month in addition to her plan’s monthly premium. Here's the math:.29 (29% penalty) × $32.74 (2023 base beneficiary premium) = $9.49 $9.49 rounded to the nearest $0.10 = $9.50 $9.50 = Mrs. Martinez's monthly late enrollment penalty for 2023 |
How do I know if I have to pay a penalty?
After you join a Medicare drug plan, the plan will tell you if you have to pay a penalty and what your premium will be. In general, you'll have to pay this penalty for as long as you have a Medicare drug plan.
What if I don't agree with the late enrollment penalty?
You may be able to ask for a "reconsideration." Your drug plan will send information about how to request a reconsideration.Complete the form, and return it to the address or fax number listed on the form. You must do this within 60 days from the date on the letter telling you that you have to pay a late enrollment penalty. Also send any proof that supports your case, like a copy of your notice of creditable prescription drug coverage from an employer or union plan.
Do I have to pay the penalty even if I don't agree with it?
By law, the late enrollment penalty is part of the premium, so you must pay the penalty with the premium. You must also pay the penalty even if you've asked for a reconsideration. Medicare drug plans can disenroll members who don't pay their premiums, including the late enrollment penalty portion of the premium.How soon will I get a reconsideration decision?
In general, Medicare’s contractor makes reconsideration decisions within 90 days. The contractor will try to make a decision as quickly as possible. However, you may request an extension. Or, for good cause, Medicare’s contractor may take an additional 14 days to resolve your case.