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Updated August 1, 2026. Quick answer: the Part D penalty is 1% of the national base beneficiary premium for every full uncovered month — $38.99 in 2026 — and it is permanent. Three years without creditable drug coverage is $14.00 a month, $168.00 a year, $3,360.00 over twenty years. Unlike Part B it counts every month, not full years, so there is no threshold to duck under.
Related reading on this site: Form SSA-1020 for Medicare Extra Help.
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The trap is that healthy people opt out
Part D is drug coverage. If you take no prescriptions at 65, buying it feels like paying for nothing, and skipping it is the obviously rational move. It is the single most common way this penalty is earned — by people making a considered decision with one piece of information missing, which is that the meter is running.
What stops the meter is creditable coverage, and the definition is broader than most people assume:
Under 42 CFR 423.56, creditable prescription drug coverage is coverage of a listed type, such as group health plan, VA, military including TRICARE, Indian Health Service or individual health insurance coverage with drug benefits, only if its actuarial value equals or exceeds the actuarial value of defined standard Part D coverage.
Federal rules list group health plan coverage, VA drug coverage, TRICARE, Indian Health Service coverage and individual health insurance with drug benefits among the types of coverage that can be creditable, if the coverage meets the value test in 42 CFR 423.56. Your plan is required to tell you in writing each year whether its coverage is creditable. That notice is the document to keep, because it is what you will be asked for.
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The penalty is a percentage of the national base beneficiary premium, which CMS resets every year. It is $38.99 for 2026, and CMS announced on July 28, 2026 that the base beneficiary premium will be $41.33 for 2027. So the penalty you are quoted is not frozen at the figure above — it is recalculated against each year’s base, and drifts upward with it. The count of uncovered months, however, is fixed forever on the day you enrol.
Two penalties, two different shapes
| Part B | Part D |
|---|---|
| 10% per full 12 months | 1% per single month |
| Percentage of the standard premium ($202.90) | Percentage of the base beneficiary premium ($38.99) |
| 11 months late costs nothing | Every month counts from the first |
The Part B side is the larger number in most real cases, because it is a percentage of a much larger premium.
Where this sits
If you are still working past 65, whether any of this applies to you at all depends on your employer’s headcount. And if you contribute to an HSA, there is a separate and more expensive timing trap: Medicare backdates, and your contributions become excess retroactively.
Figures verified against the medicare.gov Part D late enrollment penalty fact sheet, the CMS Part D 2027 fact sheet and 42 CFR 423.56 on September 29, 2026.
Penalty formula and the 2026 national base beneficiary premium from medicare.gov, read August 1, 2026. The 2027 base beneficiary premium is from the CMS Part D 2027 fact sheet of July 28, 2026, and the creditable coverage types are from 42 CFR 423.56. Figures change annually. General information, not advice.