Yes, you will pay a penalty if you don’t have a Medicare drug plan while you’re on Medicare, unless you have creditable drug coverage from another source. The penalty is called the Part D late enrollment penalty.
The penalty is calculated by multiplying 1% of the national base beneficiary premium (also called the “base beneficiary premium”) times the number of full, uncovered months you were eligible for Medicare drug coverage but didn’t enroll. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium. The national base beneficiary premium is $32.74 in 2023.
For example, if you waited 14 months after you were eligible for Medicare to join a Medicare drug plan, and you didn’t have creditable drug coverage, you’ll have to pay a 14% late enrollment penalty in addition to your monthly plan premium.
There are some exceptions to the Part D late enrollment penalty, including:
- You had creditable drug coverage from another source, such as an employer-sponsored health plan or TRICARE.
- You lived in a rural area where there was no Medicare drug plan available.
- You had low income and qualified for Extra Help, a program that helps pay for Medicare prescription drug costs.
If you’re not sure whether you’ll have to pay a penalty, you can contact the Social Security Administration at 1-800-772-1213.
Here are some tips for avoiding the Part D late enrollment penalty:
- Enroll in a Medicare drug plan as soon as you’re eligible.
- If you have creditable drug coverage from another source, make sure you know when your coverage will end.
- If you live in a rural area, check to see if there are any Medicare drug plans available.
- If you have low income, apply for Extra Help to help pay for your Medicare prescription drug costs.
