The Part D late enrollment penalty

Medicare.gov states it directly. This is CMS’s arithmetic, quoted rather than paraphrased:

The rounding happens once, after the percentage is applied — not at an intermediate step. CMS’s own worked example, from Avoid late enrollment penalties: 14 uncovered months is 14%, and 0.14 × $38.99 = $5.46, rounded to $5.50 a month. Our implementation reproduces that figure exactly, and the build fails if it ever stops doing so.

Every consumer page states the 1% calculation as though it were the definition. The regulation does not. 42 CFR 423.286(d)(3) makes it the lower bound:

The regulation makes the 1% calculation a FLOOR, not the definition. Medicare.gov and CMS 11109 publish only the 1% arithmetic. We have found no published actuarially sound amount that differs from it, and every CMS consumer example resolves to the 1% figure - but the regulation is what governs, and it does not say the penalty IS 1%.

Every CMS consumer example resolves to the 1% figure, so in practice the two branches agree. The distinction is between “the penalty is 1%” and “the penalty is at least 1%”, and the regulation says the second.

On the 2026 base beneficiary premium of $38.99. These are the 1% figures — the floor described above, not necessarily the final amount.

The penalty is not triggered by any gap. It is triggered by a continuous gap of 63 days or longer after the Initial Enrollment Period ends. 42 CFR 423.46:

What we could not confirm: No CMS text was found stating that a gap of 62 days or fewer never counts toward the month tally. What is stated is the 63-day-or-longer trigger. Those are two different statements, and only the first is on the record.

Coverage counts as creditable if it is “other creditable prescription drug coverage (prescription drug coverage that's expected to pay, on average, at least as much as Medicare drug coverage).” (CMS 11109). The employer or insurer has to tell you which it is — 42 CFR 423.56(c) puts that duty on them, not on you.

Which leads to a provision that is on almost no other page about this penalty:

In plain terms: if you were never properly told your old drug coverage was not creditable, the regulation provides a route to ask CMS to treat it as though it were. We are describing what the regulation says, not what any individual should do about it — tell us if we have read it wrong.

“The Part D late enrollment penalty is an amount that's permanently added to your Medicare drug coverage (Part D) premium.” — Medicare.gov. No ending event was found other than losing Part D coverage or receiving Extra Help. There is no years-of-good-behaviour cutoff.

The uncovered-month count is fixed once set. The dollar amount is not: it tracks the current year's base beneficiary premium, so the same penalty costs more each year the base premium rises. Medicare.gov: “The national base beneficiary premium changes each year, so your penalty amount may also change each year.”

42 CFR 423.780(e): “Waiver of late enrollment penalty for subsidy-eligible individuals. Subsidy eligible individuals, as defined in § 423.773, are not subject to a late enrollment penalty, as defined in § 423.46.” Medicare.gov puts it in plain words: “You also won't have to pay a Part D late enrollment penalty while you get Extra Help.”

The precise wording matters here. No text was found stating that Extra Help refunds penalty amounts already paid. The waiver is described as applying while Extra Help is received.

Both are surcharges added to a Medicare premium, and one person can pay both, but they have nothing to do with each other. IRMAA is driven by income from two years ago; this penalty is driven by when you signed up.

There is also a Part D IRMAA surcharge, which is a third thing again: income based, published by CMS alongside the Part B figures, and on the 2026 brackets page. The CMS-L564 page covers the employer-coverage form behind the Part B Special Enrollment Period.