Its highly Recommended. When you decide to enroll into a prescription plan you will have a late enrollment period penalty. This penalty is based on all the previous months you've been without a plan. You will your late enrollment penalty is a LIFETIME penalty. This means you will pay this penalty each month for the rest of your life.
Medicare and You 2024 (Page 83-84)
What’s the Medicare drug 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 have to pay a late
enrollment penalty if you enroll at any time after your Initial Enrollment Period
is over and 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.
Note: If you get Extra Help, you don’t pay a late enrollment penalty.
There are 3 ways to avoid paying a penalty:
1. Get Medicare drug coverage (Part D) when you’re first eligible for it. Even
if you don’t take drugs now, you should consider joining a separate 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. Go to pages 10–14 to learn more about your choices.
2. Add Medicare drug coverage (Part D) if you lose other creditable
coverage. Creditable prescription drug coverage could 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.
3. Keep records showing when you had other creditable prescription drug
coverage, and tell your plan when they ask about it. If you don’t tell your
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”
($32.74 in 2023) by the number of full, uncovered months that you were
eligible but didn’t have Medicare drug coverage (Part D) and went without
other creditable prescription drug coverage. The final amount is rounded to
the nearest $.10 and added to your monthly premium. The “national base
beneficiary premium” may increase or decrease each year. If that occurs, the
penalty amount may also increase or decrease. After you get Medicare drug
coverage, the plan will tell you if you owe a penalty and what your premium
will be.
Example:
Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment
Period ended on May 31, 2019. She doesn’t have prescription drug coverage
from any other source. She didn’t join by May 31, 2019, and instead joined
during the Open Enrollment Period that ended December 7, 2021. Her drug
coverage was effective January 1, 2022.
2022
Since Mrs. Martinez was without creditable prescription drug coverage from
June 2019–December 2021, her penalty in 2022 was 31% (1% for each of the
31 months) of $33.37 (the national base beneficiary premium for 2022) or
$10.34. Since the monthly penalty is always rounded to the nearest $0.10,
she paid $10.30 each month in addition to her plan’s monthly premium.
Here’s the math:
.31 (31% penalty) × $33.37 (2022 base beneficiary premium) = $10.34
$10.34 rounded to the nearest $0.10 = $10.30
$10.30 = Mrs. Martinez’s monthly late enrollment penalty for 2022
SECTION 6: Medicare drug coverage (Part D)85
2023
In 2023, Medicare recalculated Mrs. Martinez’s penalty using the 2023 base
beneficiary premium ($32.74). So, Mrs. Martinez’s new monthly penalty
in 2023 is 31% of $32.74, or $10.14 each month. Since the monthly penalty
is always rounded to the nearest $0.10, she pays $10.10 each month in
addition to her plan’s monthly premium.
Here’s the math:
.31 (31% penalty) × $32.74 (2023 base beneficiary premium) = $10.14
$10.14 rounded to the nearest $0.10 = $10.10
$10.10 = Mrs. Martinez’s monthly late enrollment penalty for 2023
What if I don’t agree with the late enrollment penalty?
Your Medicare drug plan or Medicare Advantage Plan with drug coverage
will send you a letter stating you have to pay a late enrollment penalty.
If you disagree with your penalty, you can request a review (generally
within 60 days from the date on the letter). Fill out the “reconsideration
request form” you get with your letter by the date listed in the letter. You
can provide proof that supports your case, like information about previous
creditable prescription drug coverage. If you need help, call your plan.
