Prescription Costs & Part D
What is the Part D late enrollment penalty?
Last reviewed: · Big Sioux Benefits Data Desk
It is a permanent surcharge added to your monthly Part D premium if you went 63 days or more without creditable drug coverage after becoming eligible for Medicare. The penalty equals 1% of the national base beneficiary premium, which is $38.99 for 2026, multiplied by the number of full months you went without coverage. You pay it for as long as you have Part D coverage.
The qualifier: the word creditable matters. Coverage counts as creditable if it is expected to pay at least as much as standard Medicare drug coverage, and plenty of employer, retiree, union, and VA drug coverage qualifies. If you had that, you owe nothing, but you may need the plan's creditable coverage letter to prove it. Notably, discount cards and pharmacy savings programs are not creditable coverage, so relying on one instead of a Part D plan is how some people accumulate a penalty without realizing it.
How the penalty works out
| Months without creditable coverage | Approximate monthly penalty in 2026 |
|---|---|
| 12 months | About $4.68 |
| 24 months | About $9.36 |
| 36 months | About $14.04 |
| 60 months | About $23.39 |
The figures are rounded to the nearest ten cents by Medicare and recalculated each year against that year's base premium, so the amount drifts as the base premium changes. Two ways out are worth knowing: people who qualify for Extra Help do not pay the penalty at all, and an existing penalty goes away while Extra Help is in effect. A Medicare Savings Program can also erase a Part B penalty, which is a separate calculation. Free help sorting out whether your old coverage was creditable is available from SHIINE at 1-800-536-8197.
Sources
- Medicare.gov — Part D late enrollment penalty — accessed 2026-08-21
- CMS — Announcement of Calendar Year 2026 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (Part D benefit parameters) — CY2026 parameters; accessed 2026-08-21
- Medicare.gov — Help with drug costs (Extra Help) — 2026 limits and amounts; accessed 2026-08-21
- SHIINE — South Dakota's State Health Insurance Assistance Program — accessed 2026-08-21
Related questions
Does the Part D penalty ever go away?
For most people, no: it lasts as long as you have Part D coverage. The main exception is Extra Help. While you qualify for Extra Help you do not pay the penalty, and a penalty you already had goes away. If your Extra Help later ends, the penalty can return unless you keep drug coverage.
I had VA drug coverage. Do I owe a penalty?
Generally no. VA drug coverage is creditable, so time covered by it does not count toward a penalty. Keep the documentation, because the burden of showing you had creditable coverage falls on you if a plan calculates a penalty in error.
Drug costs turn on your specific prescriptions, so the arithmetic is worth doing once, properly: book a free, no-pressure conversation, see your county's South Dakota plan lineup, or browse all answers. SHIINE, the state's free counseling program, is at 1-800-536-8197 and sells nothing.
Big Sioux Benefits is a licensed insurance agency, not affiliated with or endorsed by the U.S. government or the federal Medicare program. We do not offer every plan available in your area. Contact Medicare.gov, 1-800-MEDICARE, or SHIINE (South Dakota's SHIP) for all of your options.