This penalty is 1% per month of the national average set by Medicare. Generally this is around $35. This is added each month you do not sign up when you were eligible and did not have creditable coverage from a group or other plan and it never goes away. We suggest picking up a low premium Part D plan even if you don't currently have any prescriptions. Those penalties will add up over time.
I would add this to be clear. It's 1% per month. So if you go without creditable coverage and no Part D plan for 3 years (36 months); your penalty will be 36% on top of your Part D premium. That penalty is administered by CMS, so it can not be escaped. Each carrier will notify CMS that they are covering you when you sign up. CMS will notify them of your penalty and it will be applied to your premiums.
Based on the current Medicare Part D penalty formula, (using Rusty's example) if you waited 36 months to buy your penalty TAX would be $12.60 per month in addition to your Medicare Part D premium.
This is a tax, not a surcharge that goes to the insurance carrier that issues your Part D coverage.
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This is a tax, not a surcharge that goes to the insurance carrier that issues your Part D coverage.