Part D Enrollment: Penalty Pitfalls

Since 2006, people with Medicare have benefited from access to coverage for prescription medications by enrolling in private insurance plans through Medicare Part D. People eligible for Medicare who fail to enroll in Part D face a late enrollment penalty (LEP) unless they have other creditable coverage, meaning a prescription drug plan that provides equal or greater value than the standard Part D benefit. While those with creditable coverage can delay enrollment in Part D and will not pay penalties, those without creditable coverage face a penalty equal to 1 percent of the national base beneficiary premium ($34.10 in 2016) for each month they delay enrollment in Part D after qualifying for Part D coverage. This penalty is added to a beneficiary’s premium every month and, in many cases, may be paid for the rest of the beneficiary’s life.

In the past year, the Medicare Rights’ national helpline observed a notable increase in callers assessed a late enrollment penalty by their Part D plan. Yet, many of these callers could have avoided this pitfall and saved significant time and money.