Medicare Part D Penalty
For those that go without Medicare Part D for prescription drugs or another form of credible coverage, they will incur a penalty that will follow them for the rest of their natural life. Medicare calculates the penalty by multiplying 1% of the 'national base beneficiary premium' ($32.74 for 2023), with the number of months gone by without Medicare Part D or another form of creditable prescription drug coverage. This penalty is added onto your premium and will be rounded up to the nearest ten cents of your Part D premium.
Part D Penalty Example
Mr. Smith is eligble for Medicare and his initial enrollment window ended May 31st 2022. Mr. Smith has not had credible coverage to date. He has decided to enroll in a PDP plan for an effective date of January 1st 2024. Since Mr. Smith went without credible drug coverage from June 2022 through December 2023, his penalty for 2024 will be 19% (1% for all 19 months he went without coverage). 19% times the base premium of $32.74 will give us a Part D penalty of $6.22, rounding to the nearest ten cents will give him a penalty of $6.20 to pay each month on top of his monthly plan premium.
How Do I Find Out If I Have A Penalty?
After enrolling in a Medicare drug plan, the plan will let you know if you have a penalty and what will need to be paid. If you have a penalty, it will last for as long as you have a Medicare drug plan with the only exception being if the individual drops the coverage or becomes approved for drug help such as MSP (Medicare Savings Plan).
I Disagree With The Penalty, What Can I Do?
You may be able to ask for a penalty reconsideration. The plan you are enrolled in will send you a letter detailing how you can appeal the penalty. If you wish to appeal the penalty, you must do so within 60 days of recieving the letter otherwise the penalty is final. Appeal reviews can take up to 90 days.
Do I Need To Pay The Penalty Even If I Disagree With It?
Yes, you must continue to pay the penalty while your appeal is being reviewed, failure to pay the penalty could result in termination of your enrollment in the plan.
What Happens If My Appeal Is Won?
If it is found that you should not have been required to pay a penalty, you will receive a letter stating just that as well as details on how the refund process will occur for the penalty paid up to that point in time.
