Close

Last chance – give now. Before 2014 ends, help struggling seniors. Donate

Open

## DRIVER SAFETY

Take the new AARP Smart Driver Course!

## AARP Books

Get the answers you need, from Patricia Barry, AARP's Ask Ms. Medicare

Rewards for Good

## Most Popular

### Viewed

Reader stories help us fine-tune our education efforts and strengthen our calls for action on issues that matter most to you. We read and learn from every story and may use yours (with permission) to brief legislators, inspire other readers and more. Please share your story with us. Do

# Paying for the Part D Late Penalty

Q. I was eligible for Part D drug coverage when it began in 2006 but didn’t sign up then. Now I want to join the program for 2009 but I’ve been told I must pay a late penalty.  How much will this be?

A. The Part D late penalty is calculated by multiplying the number of months you’ve been without drug coverage by one percent of the national average premium (NAP), which is the average of all Part D plans nationwide in any given year.

When the Part D program began in 2006, people already in Medicare could sign up until May 15 of that year without incurring a late penalty. As you could have enrolled then, but didn’t, you’ve now been without drug coverage for 31 months (June 2006 through December 2008).  The NAP for 2009 is \$30, and one percent of this amount is 30 cents. So your late penalty in 2009 is calculated as 31 x 30 cents = \$9.30. This will be added to the monthly premium of whichever Part D plan you enroll in for 2009.

The penalty is added to your premiums for as long as you stay in the Part D program—and it’s possible that you may pay higher penalties in future years. That’s because each year your late penalty will be recalculated. The number of months you’ve been without coverage (31 in your case) remains constant. But if the NAP goes up, so does the one percent multiplier. For example, if the NAP in 2010 rises to \$32, your monthly late penalty would be 31 x 32 cents = \$9.62. As Medicare rounds the amount to the nearest 10 cents, the actual penalty in this case would be \$9.60. Similarly, if the NAP goes down to \$28, the penalty would also reduce: 31 x 28 cents = \$8.68, rounded to \$8.70.

The late penalty applies only to people who have missed their personal deadline for signing up for Part D.  That deadline varies according to circumstances. The deadline may be when you first join Medicare and have no other “creditable” drug coverage—that is, coverage Medicare regards as at least as good as Part D. Or it may be when you lose creditable coverage, for example when an employer’s plan terminates. Or it may be when you return to the United States after living abroad or are released from prison. In all these circumstances, you get a special enrollment period to sign up with a Part D plan without penalty. Click here for more detailed information on how to avoid a late penalty.

Here are some more examples of late penalties for 2009, according to the number of months without creditable drug coverage:

 Deadline for joining Part D without penalty Date Part D coverage begins Months without coverage Late penalty calculation for 2009 Monthly penalty paid in 2009* December 2008 January 2009 0 months Not applicable \$0 March 2008 January 2009 9 months 9 x 30 cents \$2.70 August 2007 January 2009 16 months 16 x 30 cents \$4.80 November 2006 January 2009 25 months 25 x 30 cents \$7.50 May 2006 January 2009 31 months 31 x 30 cents \$9.30

* Rounded to the nearest 10 cents, according to Medicare regulations

Anyone who misses their deadline for enrolling in Part D can sign up only during the annual open enrollment period that runs from November 15 through December 31 each year. If you miss this window, you must wait until open enrollment the following year, which means another year without drug coverage and 12 more months added to the late penalty calculation.

If you receive Extra Help: You will not face a late penalty if you qualify for Extra Help, the program within Part D that provides low-cost drug coverage to people whose income and savings are below a certain level.

Patricia Barry is a senior editor at the AARP Bulletin.

You can get weekly email alerts on the topics below. Just click “Follow.”

## Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Members save up to 60% on eye exams and 30% on glasses at LensCrafters.

Members can save 20% on hearing aids with the AARP® Hearing Care Program provided by HearUSA.

Members save on new installation of a ADT Companion Service® personal emergency response system.

Join or renew today! AARP members receive exclusive member benefits & affect social change.