MEDICARE LATE ENROLLMENT PENALTIES
If you do not sign up for certain parts of Medicare when first eligible, your monthly premiums may go
up due to a Late Enrollment Penalty (LEP).
PART A LATE ENROLLMENT PERIOD
If you do not qualify for premium-free Part A, and you do not buy it when you are first eligible
for Medicare, your monthly premium may go up 10%. You will have to pay the higher premium for
twice the number of years you did not sign up.
Example: You were eligible for Part A for 5 years but did not sign up and have now purchased
coverage, you will have to pay the Part A LEP for 10 years.
PART B LATE ENROLLMENT PENALTY
If you do not get Medicare Part B when you are eligible, your monthly premium may go up 10%
for each 12-month period you could have had Part B but did not sign up. In most cases, you will have
to pay this penalty each time you pay your premium as long as you have Part B.
Example: Your initial Enrollment Period ended December 2016, and you waited to sign up
until March of 2019 for a July 1, 2019 effective date. Even though you were not covered for 31
months, this included only 2 full 12-month periods so your Part B LEP is 20%.
PART D LATE ENROLLMENT PERIOD
You may owe a penalty if at any time after your Initial Enrollment Period ends, there is a period
of 63 consecutive days or more when you do not have creditable drug coverage. You will generally
have to pay the penalty for as long as you have Medicare drug coverage. The penalty is equal to 1%
of the national base premium ($33.06 in 2021), times the number of full months you did not have Part
D or creditable coverage, then rounded to the nearest $.10 and added to your monthly Part D
premium.
Example: Your initial enrollment period ended May 31, 2007, and your Part D coverage
began January 1, 2020. Since you were without coverage for 31 months, your penalty is $10.30 each
in month in 2021.
AVOIDING A PENALTY
The best way to avoid a Late Enrollment Penalty is to sign up for Medicare when first eligible.
However, you can avoid the Part A and Part B LEP by having employer or union coverage based on
your or your spouse’s current employment and signing up within 8 months of losing that coverage or
employment, whichever happens first. For the Part D LEP, if you have creditable coverage (including
employer/union coverage, state pharmaceutical assistance programs, VA, TRICARE, Indian Health
Service or individual health insurance coverage) you can avoid the penalty by signing up before that
coverage ends. Also, individuals with limited income and resources can receive financial assistance
to help cover the cost of their Late Enrollment.
Source: Medicare Scholar Late Enrollment Penalties