Late Enrollment Penalty (LEP)
If you’re enrolling into Medicare and you are questioning whether or not you need to enroll into a Medicare plan, you need to read this article to ensure you don’t put yourself in a position to pay a permanent Late Enrollment Penalty.
What is the Late Enrollment Penalty?
You have an Initial Enrollment Period (IEP) of 7 months surrounding your 65th birthday. After this IEP, if you do not have creditable medical coverage you may be assessed the LEP.
Here are some type of plans you can select to avoid the Late Enrollment Penalty:
- A Medicare Part D plan
- Prescription coverage through a Medicare Advantage (Part C) plan
- Any other Medicare plan that includes Medicare PDP coverage
- Another healthcare plan that includes prescription drug coverage that is at least as good as the coverage provided by Medicare, such as an employer’s health plan.
How Much is the Medicare Part A Penalty?
Part A is premium free if you or your spouse worked and paid taxes for at least 10 years. If you have to pay a premium, the penalty for late enrollment is 10%.
The Part A premium penalty is charged for twice the number of years you delay enrollment. If you wait 2 years, for example, you would pay the additional 10% for 4 years (2 x 2 years). The penalty applies no matter how long you delay Part A enrollment.
How Much is the Medicare Part B Penalty?
The penalty for late enrollment in Part B is an additional 10% for each 12-month period that you delay it.
Let’s say your Initial Enrollment Period ended September 30, 2010, for example. Then you enroll in Part B during the General Enrollment PeriodThis is when you can enroll in Medicare if you didn’t sign up during your Initial Enrollment Period. The General Enrollment Period (GEP) is January 1 – March 31 every year. You may have to pay a penalty for late enrollment. Coverage takes effect on July 1. in March 2013. Your late enrollment penalty would be 20% of the Part B premium, or 2 x 10%. This is because you waited 30 months to sign up, and that time period included 2 full 12-month periods.
In most cases, you have to pay the penalty every month for as long as you have Part B. If you’re under 65 and disabled, any Part B penalty ends once you turn 65 because you’ll have another Initial Enrollment Period based on your age.
How much is the LEP for Part D?
The Medicare Part D penalty is based on the number of months you went without PDP coverage. For each month without coverage, you will pay an additional premium of 1 percent of the current “national base beneficiary premium.” For 2020, the average Part D premium is $32.74; down from the 2019 $33.191.
If you are assessed this penalty, you will pay it every month for as long as you have Medicare prescription coverage. Your Medicare Part D penalty will be rounded to the nearest $.10 and added to your Part D premium. Because the LEP is based on the current year’s national beneficiary premium, it may change or go up each year.
USE LEP Calculator
If you’re unsure about calculating the LEP for yourself. Use our LEP estimator below to calculate the Late Enrollment Penalty that you can expect to pay monthly in addition to your Part D premium.
*This calculator is intended to illustrate an estimated Late Enrollment Penalty only. A person’s actual LEP will be assessed by CMS.
You may delay enrolling in Medicare Part D without penalty if you qualify for Extra HelpA Medicare program that helps people with limited income and resources pay for Medicare prescription drug plan costs, such as premiums, deductibles and coinsurance. or have creditable drug coverage. If it’s been more than 63 days since you’ve had creditable coverage, then the penalty may apply.
How to Appeal the Medicare Part D Late Enrollment Penalty
If you were penalized by Medicare, you have the opportunity to appeal it. All you have to do is complete the reconsideration request form on Medicare.gov.