Individuals who choose not to join a Medicare Part D prescription drug plan when they are first enrolled in Medicare may have to pay a Late Enrollment Penalty every month for the rest of their lives when they eventually do join a Medicare Prescription Drug (Part D) plan.
The Late Enrollment Penalty is a monthly amount added to a persons Medicare Part D premium if the individual does not join a Medicare Part D prescription drug plan when first entitled to Medicare Part A and/or enrolled in Medicare Part B and does not have any other creditable prescription drug coverage. This penalty does not apply to those receiving the low-income subsidy.
The late enrollment penalty will also be added to the Medicare Part D premium if, at any time after the initial enrollment period is over, there's a period of 63 consecutive days when the individual does not have Part D or other creditable prescription drug coverage.
How Much Is the Penalty?
It all depends on how long the individual has delayed enrolling in a Medicare Part D plan.
The Late Enrollment Penalty is calculated as follows:
- Multiply 1% of the “national base beneficiary premium” ($31.17* in 2013)
- Times the number of full, uncovered months that the member was eligible but didn’t join a Medicare prescription drug plan and went without other creditable prescription drug coverage.
- Then round the final amount to the nearest $.10 and add the total penalty to the monthly premium.
Since the “national base beneficiary premium” is subject to increase or decrease each year, the penalty amount may also increase or decrease every year. The member may have to pay this penalty for as long as they have a Medicare prescription drug plan.
*Annual changes in the base premium used to calculate the late-enrollment penalty can be found at www.Medicare.gov.