When you first become eligible for Medicare, if you do not get a Part D plan, Medicare will charge you a penalty if you do not have creditable coverage through an employer or another group like the VA. You have 63 days to get your Medicare Part D coverage.
If you don’t get coverage, you will have to pay the late enrollment penalty for every full month you delay.
How is the Part D penalty calculated?
The penalty amount is 1% of the national average premium. The national average premium is $33.06 in 2021. Multiply the national average plan premium by .01 and then multiply this by the number of months that you did not have any creditable coverage. This is then rounded to the nearest $.10 and added to the plan premium that you want to purchase. This penalty can increase or decrease every year based on the national average plan premium.
This penalty is for life, so try to avoid the Part D penalty by:
- Purchasing a Part D plan when you are first eligible
- Don’t go more than within 63 days without creditable coverage
- Keep good records of your creditable coverage because Medicare will ask for proof of coverage from an employer or other group like the VA. You can always appeal the penalty and you will need to prove you had coverage.
Learn More: What is Part D IRMAA?
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