You can sign up for a Medicare Part D drug plan when initially eligible for Original Medicare. There’s a 3-month period starting when your Medicare parts A and B become active. During this time, you can enroll in Medicare Part D without a late enrollment fee.
Your monthly Part D premium includes a late enrollment penalty if you miss this time frame. This penalty is 1% of the average monthly prescription premium cost for each month you delay enrollment. In total, this works out to 12% annually.
Medicare determines the late enrollment penalty by taking 1% of the national base beneficiary premium, which is $36.78 in 2025, and multiplying it by the number of months you spend without coverage.
Then, Medicare rounds this amount to the nearest 10 cents and adds it to your Part D monthly premium. Medicare recalculates this amount annually using the base premium amount for that year.
This additional charge is permanent, and every monthly premium includes it for as long as you have Medicare Part D coverage and don’t enroll in a Medicare drug plan when you initially become eligible for Original Medicare.
You also incur it if you’re eligible for Medicare and go 63 days or longer without creditable drug coverage. Once you enroll in a Medicare drug plan, the plan can inform you of your premium amount and whether a penalty is applicable.
Typically, you don’t incur a Part D penalty if you qualify for Extra Help or have drug coverage equivalent to Part D, such as a Medicare Advantage (Part C) plan with drug coverage.
You also have the right to challenge an unfair late enrollment penalty. Some reasons you may want to file an appeal include:
- too little notice of your penalty
- access to other creditable drug coverage
- short notice of non-creditable coverage, preventing you from enrolling sooner
- plans miscalculating your months without creditable coverage
To file the appeal, you must complete the Part D LEP Reconsideration Request Form C2C.