A Late Enrollment Penalty (LEP) usually refers to a lapse in creditable prescription drug coverage but sometimes may refer to a lapse in creditable medical coverage, which is less common. In this article we will primarily focus on the Part D (prescription) late enrollment penalty and how it affects you.
The Part D late enrollment penalty occurs when someone who is eligible for Medicare goes without creditable prescription drug coverage for more than 63 days. When that person chooses to enroll onto a Medicare Prescription Drug plan they would have to pay a penalty for the number of months they went without creditable coverage. This penalty is added to the plan’s monthly premium and is calculated as 1 percent of the “national base beneficiary premium” times the number of months the individual has gone without prescription coverage. Once a penalty has been assigned, it has no expiration.
We work with clients like you to ensure that you are on the right health plan. One of the most important parts of our process is ensuring that you also have a creditable drug plan that meets your needs.
What is Creditable Coverage?
Creditable coverage is coverage as good as or better than Medicare’s minimum standards. All Medicare Prescription Drug plans are creditable but if you have prescription coverage outside of a Medicare plan and would like to know if it is creditable, we advise that you contact the administrator of your benefits to confirm.
For further reading on the Part D Late Enrollment Penalty, click here.