How the Penalty is Calculated
The late enrollment penalty is 1% of the national base beneficiary premium for each full month you went without creditable drug coverage. In 2026, the national base beneficiary premium is approximately $38.99/month.
Example: If you went 24 months without creditable coverage, your penalty would be 24% × $38.99 = ~$9.36/month added permanently to your Part D premium. This amount adjusts slightly each year as the base premium changes.
Who is Exempt from the Penalty
You won't face a late enrollment penalty if you had creditable coverage during the gap period. Creditable coverage includes:
- Employer or union prescription drug coverage (must be certified as creditable)
- TRICARE (military coverage)
- VA drug benefits
- FEHB (Federal Employees Health Benefits)
- PACE (Program of All-inclusive Care for the Elderly)
- Indian Health Service coverage
- Extra Help / Low Income Subsidy
How to Avoid the Penalty
The simplest way to avoid the penalty is to enroll in a Part D plan during your Initial Coverage Election Period (ICEP) - even if you don't take any medications. Low-premium plans (sometimes $0–$15/month) exist specifically for people who want to avoid the penalty without paying much.
A $0-premium Part D plan can protect you from the late enrollment penalty at no cost. If you rarely use prescription drugs, this is often the smartest move.
Appealing the Penalty
If you believe you were incorrectly assessed a late enrollment penalty, you can appeal. Common grounds for appeal include: you had creditable coverage but it wasn't reported to Medicare, or you were enrolled in a plan that didn't notify you it wasn't creditable. Contact Medicare at 1-800-MEDICARE to begin the appeals process.