Many people turn 65, feel healthy, and skip a drug plan. That can be a costly choice later. Medicare Open Enrollment runs October 15 – December 7, which makes this a good moment to check whether you owe a penalty or are about to start one. Here is how it works, in plain English.
- Penalty = 1% × the national base beneficiary premium × the number of full months you went without coverage.
- The base premium is $38.99 in 2026 (Medicare.gov). CMS announced $41.33 for 2027 in its July 28, 2026 Part C & D announcement.
- The result is rounded to the nearest $0.10 and added to your plan's monthly premium.
Watch: The Part D late enrollment penalty in 60 seconds
Video transcript
When does the penalty start?
According to Medicare.gov, a penalty may apply if, after your Initial Enrollment Period ends, you go 63 or more days in a row without Part D or other creditable prescription drug coverage. "Creditable" means the coverage is expected to pay, on average, at least as much as Medicare's standard drug coverage. Employer, union and some VA or TRICARE plans often qualify, and the plan should tell you each year. Keep those notices.
A simple example
Medicare.gov gives the model: if you waited 14 months after becoming eligible, the penalty is 14% of the base premium. At the 2026 base premium of $38.99, that works out to about $5.50 a month (14% × $38.99 ≈ $5.46, rounded to $5.50). The amount is recalculated as the base premium changes each year, and it generally stays for as long as you have Medicare drug coverage, even if you switch plans. This is an illustration of the formula, not a quote for your situation.
How to avoid it
- Enroll in a Part D plan or a Medicare Advantage plan with drug coverage during your Initial Enrollment Period, even if you take few prescriptions.
- Keep creditable coverage if you stay on a job-based plan, and save the creditable-coverage notice.
- Do not let a gap reach 63 days when you leave an employer plan. Enroll promptly.
- Check for Extra Help. Medicare.gov says people who receive Extra Help do not pay the late enrollment penalty. Ask us or the Social Security Administration about eligibility.
Not sure if you owe a penalty?
Tell us when you became eligible and what drug coverage you had. We will walk through it with you. Free, no pressure.
Check my Part D situationWho gets caught by the penalty most often?
The penalty usually surprises people in a few common situations. None of these are unusual, and most are avoidable with a little planning:
- People who feel healthy at 65. They take no regular medications, so they skip a drug plan. Years later a new prescription arrives and the months add up.
- People leaving a job. Retiring and enrolling in Medicare can leave a gap between employer coverage ending and Part D starting. Counting days matters.
- People who assumed other coverage was enough. Some coverage is not creditable. Always ask for the written creditable-coverage notice rather than assuming.
- People who miss the Initial Enrollment Period. Your Part D clock starts when you are first eligible, which is tied to your Medicare Part A or Part B eligibility, not to when you decide to shop for a plan.
Because months are counted in whole numbers, even a few months can leave a small but permanent charge. Waiting "just one more year" to see whether you need a plan rarely saves money once the penalty is factored in.
A quick checklist before December 7
- Find any creditable-coverage notices from past employers or unions.
- Confirm you currently have drug coverage, through a standalone plan or an Advantage plan with drugs included.
- Look at your plan's Annual Notice of Change, which shows next year's premium and drug list. Our ANOC guide explains how to read it.
- If you believe you qualify for Extra Help, ask now. It can remove the penalty.
- Remember that changes made during Open Enrollment must be received by the plan by December 7 and take effect January 1.
Already have a penalty? What you can do
You cannot simply switch plans to erase it, but you have options. Compare plans during Open Enrollment, since the penalty is added to whichever plan you choose and premiums differ. If you think the penalty is wrong, you can ask for a review of the decision; the letter from your plan explains how. Our Part D cost guide and drug cost guide cover other ways to lower your yearly spending.
Medicare help in your state
The late enrollment penalty rules are federal, so they apply the same way in every state. Plan availability and premiums vary by state and county, so call us at (571) 354-0146 for what applies where you live. We are licensed in:
- Virginia
- Maryland
- North Carolina
- South Carolina
- Georgia
- Alabama
- Louisiana
- Texas
- Michigan
- Indiana
- West Virginia
How Honorbrook helps
We are an independent agency. We check your drug list against plans in your county and explain how any penalty affects the total cost. We do not offer every plan in every area, so Medicare Plan Finder remains the place to see all options.
This article is general information, not insurance advice. Plan details vary, and a licensed agent can confirm what applies to you.