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Medicare and the Late Enrollment Prescription Drug Penalty

Medicare encourages everyone enrolled in Part A and/or Part B to also enroll in a Part D Prescription Drug Plan (PDP), even if you are not taking any medications. If you forego a PDP, and do not have other credible coverage like VA or employer prescription benefits, you could be subject to a late enrollment penalty when you eventually enroll in a Part D Plan.

How does Medicare apply the late Enrollment Penalty?

  • After you become eligible, you may be subject to a penalty anytime you do not have a PDP or creditable coverage for a period of 63 or more consecutive days.
  • Once you enroll in a PDP, your late enrollment penalty will be added to your monthly PDP premium.
  • You will have to pay this monthly penalty fee as long as you have a PDP.

How does Medicare calculate the Late Enrollment Penalty?

Your penalty is based in the number of months that you were without a PDP or other credible prescription coverage. These numbers may change every year. For 2017:

  • For every month that you do not have coverage you will be charged 1% of the national average for PDP premiums: $35.63, rounded to the nearest $.10.
  • Example:
    • Jake becomes eligible for a Part D Plan on January 1, 2017. He declines coverage because he had no medications
    • Should Jake change his mind, he will now have to enroll during Medicare’s Annual Open Enrollment Period
    • Jake decides to purchase a PDP during open enrollment of 2017 with a January 1, 2018 start date.
    • This means that Jake will be without PDP coverage for 12 months
      • 1% x 12 months = 12%
      • 12% x 35.63 = 4.275
      • Rounded to nearest $.10 = $4.30
    • Medicare will charge Jake $4.30 every month in addition to his regular PDP premium, as long as he maintains a PDP
      • So, if Jake enrolls in an $18 a month plan, he will actually have to pay $22.30 a month

What if I disagree with my penalty?

Medicare will perform a review of your penalty. Your PDP company will be able to provide you with a reconsideration request form.

While the Wooten Agency has no say over how these penalties are determined, we are always happy to help you choose a Prescription Drug Plan that will suit your medication and budget needs.

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Regardless of whether you purchase a policy or not, we are always happy to help in any way we can.

Client Testimonials

Medicare and Late Enrollment Prescription Drug Penalty | Wooten Agency

  • "This is a family-owned business who cares about their potential clients. I was looking for help with health insurance and even though it turns out I don't need new health insurance at this time, I feel compelled to write a review because of how thorough Brendan was. He was very knowledgeable and easy-going. He didn't seem pushy at all and listened to everything I had to say. He made sure he was getting all the information correct. I would recommend this agency for any insurance needs." - Doug C.
  • "I sought help from Wooten Agency; Ed, along with Nancy, took the bull by the horns and sorted things out for us very quickly. Shortly thereafter Ginny took over. She is definitely most qualified as a plan selector for Medicare plans and issues related to Medicare. My appreciation to Crystal for the gracious way she always responds to telephone calls and makes every effort to ensure one is not forgotten. And Dana....the one contact we had was enough to find out you are similarly inclined to help a client." - Frank V.
  • "You [Aaron] have been so helpful, and you have all taken a personal interest in my individual and specific questions in order to make the best insurance choices for my needs. Thank you all! I look forward to working together in the future months and years." - Susan H.
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