What is the Part D Late Enrollment Penalty?

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If you delay enrollment in Part D after you have become eligible for Medicare and do not have creditable prescription drug coverage from another source, you may incur a late enrollment penalty.  Creditable prescription drug coverage is coverage as good as or better than Medicare drug coverage.  Examples would include drug coverage from most group plans, VA and TRICARE.  If you receive state aid for your prescriptions costs through the Extra Help program, you are exempt from the late enrollment penalty.  The penalty is triggered when you enroll in Part D and will be applied as long as you have Part B or Part D.

The Part D late enrollment penalty is 1% of the “national base beneficiary premium” ($33.06 in 2021)[1] times the number of full months you were without Part D, starting 63 days after your Initial Enrollment Period ends.  Your Initial Enrollment Period ends three months following your 65th birthday month.  The national base beneficiary premium may change every year.

[1] “Part D Late Enrollment Penalty,” U.S. Centers for Medicare and Medicaid, accessed January 6, 2021, https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/part-d-late-enrollment-penalty