What is the Part D late enrollment penalty?
A late fee added to your drug plan bill for each month you went without drug coverage that counts. Here is how it works and how to fight it.
- The Part D late enrollment penalty is an extra amount added to your drug plan bill each month, based on how long you went without drug coverage that counts.
- When job coverage ends, you get eight months to sign up for Part B but only two months for Part D.
- A gap of fewer than 63 days in a row does not set it off.
The Part D late enrollment penalty is an extra amount added to your monthly drug plan bill. You owe it if you went months without drug coverage that counts. It is separate from the Part B penalty, and it lasts as long as you have Part D.
How the penalty is calculated
Two things set the amount. One is how many full months you went without creditable drug coverage, drug coverage at least as good as standard Part D. The other is a national figure Medicare sets fresh each year.
The longer the gap, the larger the penalty. It is added to your premium, the monthly bill for your drug plan.
Two things make it worse than it first sounds.
- It is figured again each year against the current national number, so it can grow.
- It follows you from plan to plan. Moving to a plan with a lower premium does not shed it.
A gap of a few years turns into a real add on for the rest of your life.
When the penalty clock runs
The clock starts when your Initial Enrollment Period ends, the first window you have to sign up for Medicare. It counts full months with no creditable coverage.
A gap of fewer than 63 days in a row does not set it off. It gives you a short buffer when you change plans.
The buffer matters most when you leave job coverage. Do not use all of it.
What creditable coverage means
Creditable coverage is drug coverage at least as good as standard Part D. Your employer, union or retiree plan must send you a notice each year saying whether yours counts.
- VA drug benefits count.
- TRICARE counts.
- Most job drug plans count, but check the notice instead of assuming.
- Marketplace coverage after you are eligible for Medicare does not protect you.
- COBRA drug coverage, the job plan you can pay to keep after you leave, may or may not count. Read the notice.
Keep every one of those notices in one folder. See what creditable coverage means.
The paperwork mismatch that catches people
When job coverage ends, you get eight months to sign up for Part B without a penalty. For Part D you get two months.
People handle Part B with care, feel they still have time, and walk into a drug penalty. Handle both in the same sitting. See how to apply after 65.
Two months, not eight. That mismatch causes more avoidable Part D penalties than anything else.
Appealing a penalty
Penalties do get charged in error, usually because there is no record of coverage you really had.
- You get a notice stating the penalty and giving you a chance to answer.
- Send in the creditable coverage notices from the years in question.
- If you do not have them, ask your old employer or plan for a letter with your coverage dates. Most will write one.
- Answer by the deadline on the notice. Missing it makes this much harder.
There is also relief in narrow cases, such as being given wrong information by a federal employee or a plan representative.
If you qualify for Extra Help
The penalty is waived for people who get Extra Help, the program that pays most of your drug costs when your income is limited. Applying can clear the penalty and most of your drug costs at once.
See Extra Help and the Part B penalty.
If a penalty shows up on your bill, gather your old coverage notices and check the dates before you pay. Call our McAllen office at (956) 687 3334, or enter your ZIP code in the plan pricing box on this page.
Common follow-up questions
Does the Part D penalty ever go away?
Not on its own. It lasts as long as you have Part D. It is waived if you qualify for Extra Help.
I switched plans. Does the penalty reset?
No. It follows you from plan to plan, and it is figured again each year against the national number Medicare sets.
How long a gap is allowed?
Fewer than 63 days in a row without creditable coverage does not set off a penalty. Do not plan around the edge of that.
Want this looked at properly?
We are an independent agency in McAllen serving Hidalgo, Cameron and Starr counties. There is no obligation to talk it through.
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Gerino Alejos
Licensed insurance agent · License 3128710 · NPN 18243381
Owner of McAllen Insurance Group, an independent agency on North 10th Street in McAllen. Works with clients across Hidalgo, Cameron and Starr counties on Medicare, Marketplace health, life and auto coverage. Se habla español.