How much is the Medicare Part D late enrollment penalty 2024?
One of the worst surprises for someone on Medicare are unexpected costs. While the prescription drug benefit is voluntary, if you don’t enroll when you first become eligible, you may have to pay a hefty late enrollment penalty if you choose to sign up at a later date.
This late enrollment penalty will be applied:
- If you enrolled in a plan after your Initial Enrollment Period is over, or
- if there is a period of 63 or more days in a row when you don’t have Medicare drug coverage or other creditable prescription drug coverage
Your Penalty: You are charged an extra 1% of Medicare’s national average drug insurance premium for each month that you did not have prescription drug coverage as good as Medicare’s but could have (this is called ‘credible coverage, see below’).
If you for example waited one year to enroll in a Part D plan after you first became eligible, you have to multiply 1% of the national base beneficiary premium for the current year, times the months you missed being enrolled. The result will be the total amount of ‘penalty’ that will be permanently added to your monthly premium for the Part D plan you are going to join.
Taking our example above (if you waited for one year, adjust your months accordingly) and the numbers for 2024 : Multiply 1% of $34.70 (the national base beneficiary premium for 2024) by 12 (the amount of months you waited). A total penalty of $4.16 (rounded) would be permanently added to the monthly premium of the plan you chose.
Credible Coverage: If you however have had other coverage during the time you were not enrolled in a Part D plan (such as included in group insurance with your former employer, or in a supplemental plan you joined prior to 2006), you may not have to pay this penalty, if said plan has provided you with ‘credible coverage’. The insurance company that administers that plan has to notify you each year whether your coverage is creditable, meaning comparable to Medicare’s coverage. So keep those notifications, in case you may want to join a Part D plan at a later time.
Example: Anne turns 65 in February. She has through May (three months after she turns 65) to enroll in a Part D plan without penalty. Although she has no other drug coverage, Anne chooses not to enroll in a prescription drug plan at that time.
In August, she becomes ill and decides that getting drug coverage now would be a good idea, but she can’t enroll until the next ‘enrollment’ opportunity, which is October 15 through December 7. If she enrolls on December 1st, her coverage will start on January 1st.
She is now seven months ‘late’ in enrolling (from June through December), and must pay an additional $2.43 (= 1% of $34.70 times 7 months, rounded) added to her monthly premium for as long as she keeps the Medicare prescription drug coverage.
You can see that it really is a good idea to join a Medicare Part D Prescription drug plan at the same time when you first enroll in Medicare!
