How to Avoid the Part D Late-Enrollment Penalty (And What to Do If You Already Owe One)

The Part D late-enrollment penalty is the quietest expensive mistake in Medicare. It never shows up on a birthday card, it doesn't bill you until years later, and once it starts, it's attached to your premium for the rest of your life.

Here's who owes it, how it's calculated, and — most importantly — the free one-page letter that keeps you from owing it at all.

When the penalty starts

You owe a Part D penalty if you go 63 or more days in a row without either Medicare drug coverage or "creditable" drug coverage from somewhere else (an employer plan, TRICARE, VA, or a union plan that Medicare recognizes as at least as good as Part D).

The clock usually starts at the end of your 7-month Initial Enrollment Period around your 65th birthday — unless you had creditable coverage that whole time.

How it's calculated

Medicare charges 1% of the national base Part D premium for every full month you went without coverage. In 2026 the national base premium is about $36.78, so each month of delay adds roughly 37¢ to your premium — every month, for life.

Realistic example:

• Skip Part D for 24 months → 24% of $36.78 ≈ $8.83/month extra → about $106/year for the rest of your life.
• Skip for 60 months (5 years) → 60% of $36.78 ≈ $22.07/month extra → about $265/year for life, indexed up as the base premium rises.

The one-page letter that saves you

Every employer, TRICARE, VA, or union drug plan is required to send you a Notice of Creditable Coverage once a year, usually before October 15. It's a one-page letter that says whether your drug coverage is as good as Medicare's.

Keep every one you get. When you eventually enroll in Part D, Medicare will send a form asking whether you had creditable coverage and when — a stack of these letters answers "yes" and clears any penalty.

Traps that catch people

• COBRA is not creditable for the Part D penalty in most cases. Assume it isn't and enroll in Part D on time.
• "I don't take any drugs, I'll skip Part D." The cheapest Part D plan in most areas is under $10/month — less than the penalty you'll owe later.
• Retiree health plans can be creditable OR non-creditable. Read the notice, don't assume.
• VA drug benefits are creditable, but only for as long as you actually use the VA pharmacy. Losing VA eligibility restarts the clock.

If you already owe a penalty

Once Medicare adds the penalty, it's usually permanent — but you can request a reconsideration if you believe you had creditable coverage the whole time. Your Part D plan will send an official form; return it with copies of every Notice of Creditable Coverage you can find. Reconsiderations succeed more often than people expect.

Educational only. The national base Part D premium changes each year; verify current figures on Medicare.gov before making a decision.