Once you become eligible for Medicare, you can enroll in Part D, which helps cover the cost of prescription drugs. Some people choose to delay registering for Part D. In some circumstances, Medicare imposes a late fee on individuals who defer Part D enrollment.
If you opt not sign up for Part D during the Initial Enrollment Period, your premium might go up when you do enroll in Part D because Medicare adds the late fee to your installment permanently. You can incur a late fee if you go 63 days after the Initial Enrollment Period without Medicare drug coverage or another credible prescription drug coverage plan.
Some people have employer-sponsored or union prescription drug coverage that generally pays at least as much as Medicare’s drug coverage. Since they have comparable insurance, Medicare will not penalize them for postponing enrollment in Part D.
The late fee applies to those without prescription drug insurance for at least 63 days after the Initial Enrollment Period who do not qualify for the Extra Help Program.
Qualifying for the Extra Help Program
The federal government will not penalize individuals who meet the requirements of the Extra Help Program for delaying enrollment in Part D.
In 2022, you can qualify for the Extra Help Program if your monthly income does not exceed $1,719 for a single person and $2,309 for couples. Your assets must also be below particular limits. Those without credible coverage who do not meet these requirements may incur late enrollment penalties.
Calculating the Fee
The size of the late fee depends on how long a person goes without prescription drug coverage after the Initial Enrollment Period and before starting Part D. The longer you wait without insurance to enroll, the greater your penalty will be.
To determine your late penalty, multiply 1 percent of the national base beneficiary premium by the number of months you went without prescription drug insurance. The national base beneficiary premium adjusts yearly. It is $33.37 in 2022 and will be $32.74 in 2023. Then round the number to the nearest 10 cents. The late fee is then added to your monthly premium.
Preventing the Penalty
To avoid the late enrollment penalty, keep several things in mind:
- Consider starting Medicare Part D or a Medicare Advantage plan with drug coverage as soon as you become eligible. Even if you do not think you need prescription drug coverage now, you might need it in the future.
- Enroll in Medicare drug coverage as soon as you lose credible prescription drug coverage.
- Maintain records of your prescription medicine coverage.
- When you apply for Medicare prescription drug insurance, be sure to disclose your previous coverage. Program administrators might not know you have private insurance, and you could get a late penalty if you do not include this information with your application.
Appealing the Fine
Individuals who see a late enrollment penalty on their monthly premiums and believe the charge is improper can ask a Medicare contractor to reconsider it.
To request a reconsideration, you must complete a reconsideration form along with any information backing your case, such as records of previous enrollment in credible prescription drug coverage. After you ask for a review, a Medicare contractor will send you a letter explaining a decision on whether to maintain, remove, or reduce the late penalty. Note that this process can take several months.
Even if you believe you should not have received a late penalty, the law requires that you pay it. If a Medicare contractor decides to remove the late penalty from your premium, you could get a refund.
For assistance removing a late penalty or to learn when to enroll in Medicare prescription drug coverage, consider speaking to an elder law attorney.