Do you have creditable prescription drug coverage? Creditable drug coverage is expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. It could be drug coverage you get from a current or former employer or union, or from TRICARE, the Indian Health Service, or the Department of Veterans Affairs. If you don’t have creditable coverage, you may want to join a Medicare drug plan now to avoid the Part D late enrollment penalty, even if you don’t use a lot of prescription drugs.
What is the Part D late enrollment penalty?
In short, the late enrollment penalty is an amount added to your Medicare Part D monthly premium.
You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your Initial Enrollment Period is over, you go without one of these:
- A Medicare Prescription Drug Plan (Part D)
- A Medicare Advantage Plan (Part C) (like an HMO or PPO)
- Another Medicare health plan that offers Medicare prescription drug coverage
- Creditable prescription drug coverage
People who have and keep creditable prescription drug coverage, or who get Extra Help to pay for their prescriptions don’t have to pay this penalty.
How do I know if my prescription drug coverage is “creditable”?
Your drug plan must tell you each year if your drug coverage is considered creditable. They may send you this information in a letter, newsletter, or other piece of correspondence. Be sure to keep this information! You may need it if you join a Medicare drug plan later to avoid the Part D late enrollment penalty. If you have creditable prescription drug coverage when you first become eligible for Medicare, generally you can keep it without paying the late enrollment penalty if you sign up for Part D later.
The late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage. In general, you’ll have to pay this penalty for as long as you have a Medicare drug plan.
How much is the Part D penalty?
The late enrollment penalty amount depends on how long you went without Part D or creditable prescription drug coverage.
Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($34.70 in 2024) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.
The national base beneficiary premium may change each year, so your penalty amount may also change each year.
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