What is the Medicare Part D Late Enrollment Penalty?

Medicare maintains enrollment schedules throughout the year. Medicare Part D prescription drug coverage is optional—you are not automatically enrolled and you are not required to have it. But if you want and need Medicare Part D prescription drug coverage, you need to enroll during a formal enrollment period to avoid paying a Late Enrollment Penalty, or LEP. The LEP is a dollar amount added to your Part D premium.

If you did not have creditable drug coverage for 63 days or more and you did not enroll during your Initial Enrollment Period or the Annual Enrollment Period, you will pay a LEP unless you qualify for an exception.

Enrolling during one of Medicare’s formal enrollment periods can help you avoid late enrollment penalties and will ensure that your coverage becomes effective as soon as possible. Here are some tips.

Do Your Research

There are several resources to help you learn about Medicare Part D and Medicare’s enrollment periods.

  • Review MedicareMadeClear.com’s Decision Road Map to see which enrollment periods apply to you, learn what you need to know to enroll, and get a checklist customized by different eligibility criteria.
  • Learn about enrollment windows and timing, and what happens if you miss the windows.

During Your Initial Enrollment Period

If you are becoming eligible for Medicare because you’re turning 65, your Initial Enrollment Period (IEP) begins three months before your 65th birthday, runs through your birth month and ends three months after your 65th birth month. If you want to enroll in prescription drug plan, you must enroll during your IEP in order to avoid the late enrollment penalty.

When it’s Time to Enroll

After doing your research with the plan finder, enrolling is easy. In fact, you can enroll within the Medicare Plan Finder by clicking the “Enroll” button. However, if you’d prefer to enroll over the phone, most plans have toll-free contact numbers so that you can speak to a plan representative. If you prefer not to enroll over the phone, just request an enrollment packet to be mailed to you.

How much is the penalty?

The Late Enrollment Penalty, sometimes called “LEP,” is calculated using a national base beneficiary premium (which is $31.08 in 2012*) and multiplying 1% of that by the calendar months that you are not covered (example: .31 x 12 = 3.72 per calendar year).

  • This number is added to your monthly premium. So, for enrolling one year late, you could pay an additional $46.08 per year in late enrollment penalties.
  • Unless you qualify for an exception, you may avoid the penalty if you file a late enrollment penalty appeal with proof of creditable coverage during the late period, but signing up within your enrollment period can ensure you avoid this fee.

If you do your research, keep an eye on your Initial Enrollment Period dates and make sure you enroll on time, you can avoid a Part D late enrollment penalty.

-Posted by Medicare Made Clear – *Source: Medicare.gov

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