The Medicare Part D Late Enrollment Penalty Explained

What the Part D late enrollment penalty is

The Part D late enrollment penalty (sometimes called the LEP) is an amount Medicare adds to your monthly prescription drug plan premium if you waited too long to get drug coverage and had no other coverage that counted in the meantime. It is designed to encourage people to sign up for drug coverage when they first become eligible, rather than waiting until they need expensive medications.

The penalty is not a one-time fee. Once it applies, it is added to your premium for as long as you have Medicare drug coverage. This is true even if you switch to a different Part D plan or change to a Medicare Advantage plan that includes drug coverage — the penalty follows you.

One important exception: people who qualify for the Extra Help program (also called the Low-Income Subsidy) that helps pay Medicare drug coverage costs do not pay a Part D late enrollment penalty.

How the penalty is calculated in 2026

Medicare calculates the penalty using a single national figure called the national base beneficiary premium. For 2026, that amount is $38.99 per month.

The formula is: 1% of $38.99, multiplied by the number of full months you were eligible for Part D but did not enroll and went without creditable drug coverage. Medicare rounds the result to the nearest $0.10 and adds it to your monthly drug premium.

• Step 1: Count the full months you went without coverage after your enrollment period ended.
• Step 2: Multiply that number by 1% to get your penalty percentage.
• Step 3: Multiply the percentage by the national base beneficiary premium ($38.99 in 2026).
• Step 4: Round to the nearest $0.10 — that is the dollar amount added to your monthly premium.

A worked example

Medicare gives this example. Suppose you went 14 full months without creditable drug coverage after your enrollment period ended. That is a 14% penalty.

14% of $38.99 equals $5.4586. Medicare rounds that to the nearest $0.10, which is $5.50. So in 2026 you would pay an extra $5.50 each month on top of your plan's premium.

Because the penalty is tied to the national base beneficiary premium, and that figure can change each year, your penalty is recalculated annually and can rise (or fall) over time. It is not locked in at the dollar amount you first paid.

What triggers the penalty: the 63-day rule

The penalty is triggered by a continuous gap of 63 days or more — at any time after your Part D initial enrollment period ends — during which you were eligible to enroll but had neither a Medicare Part D plan nor any other creditable prescription drug coverage.

In other words, a short gap of a few weeks will not trigger the penalty. It is a gap of 63 days or longer without qualifying coverage that does.

What counts as creditable drug coverage

Creditable prescription drug coverage is drug coverage expected to pay, on average, at least as much as standard Medicare drug coverage. If you have creditable coverage, you do not owe a penalty for that time, even if it is not a Medicare drug plan.

Each year, your plan or your employer/union must send you a Notice of Creditable Coverage telling you whether your drug coverage counts as creditable. Keep these notices. If you later join a Medicare drug plan, you may need them to prove you had creditable coverage and avoid a penalty.

• A current or former employer or union drug plan
• TRICARE
• The Indian Health Service (IHS)
• The Department of Veterans Affairs (VA)

Avoiding, paying, and appealing the penalty

The simplest way to avoid the penalty is to sign up for Part D when you are first eligible, or to keep creditable drug coverage (such as employer or VA coverage) and not let a gap reach 63 days. Qualifying for Extra Help also removes the penalty entirely.

Under federal law, the penalty is treated as part of your premium, so you pay it together with your Part D plan premium, the same way you pay the premium itself.

If your plan determines you had 63 or more continuous days without creditable coverage after your initial enrollment period, it will notify you in writing. That notice includes an LEP Reconsideration Notice and an LEP Reconsideration Request Form.

If you disagree, you can appeal. You must complete, sign, and mail or fax the Part D LEP Reconsideration Request Form within 60 days from the date on the letter telling you that you owe a penalty. (A late request must explain the reason for the delay.) The Part D Independent Review Entity (IRE), C2C Innovative Solutions, Inc., reviews the request and generally tells you its final decision within 90 calendar days of receiving it.

How this differs from the Part B penalty

The Part D penalty is separate from the Part B late enrollment penalty. They are calculated differently.

The Part B penalty is 10% of the standard Part B premium for each full 12-month period you were eligible but did not enroll, and you generally pay it for as long as you have Part B. By contrast, the Part D penalty is based on 1% per month of a national base figure. You can owe both, neither, or just one, depending on your enrollment history.

For context on overall drug costs: in 2026, Part D also has a $2,100 yearly cap on what you pay out of pocket for covered drugs — a limit that applies on top of any penalty you may owe.