Late Enrollment Penalty (LEP)
A late enrollment penalty is a permanent surcharge added to your Part B or Part D premium if you go without coverage after you are first eligible and lack other creditable coverage. The penalty grows the longer you wait.
Understanding Late Enrollment Penalty (LEP)
A late enrollment penalty (LEP) is a permanent surcharge added to your Medicare premium when you delay enrolling in Part B or Part D after you are first eligible and do not have other creditable coverage. The penalty is designed to encourage timely enrollment, and in most cases it lasts for as long as you have that part of Medicare.
For beneficiaries, the penalties can be significant. The Part B penalty adds 10% to your premium for each full 12-month period you could have had Part B but did not. The Part D penalty adds 1% of the national base premium for every month you went without creditable drug coverage. Both grow the longer you wait.
For example, if you went 24 months without Part D drug coverage, your penalty is roughly 24% of the base premium added to your Part D premium every month — permanently. Keeping proof of creditable coverage from an employer plan is how you avoid it.
Have questions about the late enrollment penalty? Get a free Medicare review and we will confirm whether your past coverage protects you from extra costs.
Related Terms
Part B (Medical Insurance)
Medicare Part B is medical insurance covering doctor visits, outpatient care, preventive services, lab tests, and durable medical equipment. It has a monthly premium and an annual deductible, after which you typically pay 20% coinsurance.
Part D
Medicare Part D is prescription drug coverage. You can get it through a standalone Prescription Drug Plan (PDP) or through a Medicare Advantage plan that includes drug coverage.
Creditable Coverage
Creditable coverage is prescription drug coverage that's at least as good as Medicare Part D. If you have it, you can delay Part D enrollment without penalty.
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