People who go 63 days or more in a row without creditable drug coverage after their Medicare enrollment period ends owe a Part D late-enrollment penalty equal to 1 percent of the national base beneficiary premium for each full month they were uncovered. The charge is added to the monthly premium of whatever drug plan they later join. For 2027, the Centers for Medicare & Medicaid Services set that base premium at $41.33.
That works out to about 41 cents per uncovered month, with the total rounded to the nearest dime. Someone who waited 14 months pays a 14 percent penalty, or $5.80 a month at the 2027 base premium, and someone who waited three years pays 36 percent, or $14.90. The percentage keeps growing with each additional month: 24 months comes to $9.90 a month, and 60 months to $24.80, or $297.60 a year.
For a retiree, the question is whether any stretch since becoming eligible counts as uncovered. A gap of 62 days draws no penalty, while a gap of 63 days or more starts the count, and the count then runs over every full uncovered month. Months with other creditable drug coverage are not counted, according to Medicare.gov’s Part D costs page, so the dates of any earlier coverage decide the total.
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How the monthly penalty is calculated
Medicare.gov gives the formula as 1 percent times the national base beneficiary premium times the number of full uncovered months. The base premium was $38.99 in 2026. CMS published the $41.33 figure for 2027 in a July 28 fact sheet alongside the national average monthly bid amount of $296.05, and the page warns that the base premium may go up each year, so the penalty may increase with it.
The penalty is calculated from the national figure, not from the premium of the plan a person joins. A cheap plan and an expensive one carry the same penalty for the same number of missed months, added on top of each plan’s own premium. Because it follows the person, the penalty continues as long as the person has Part D coverage, even after switching plans.
The formula counts months without coverage, not months with prescriptions, so the penalty reaches people who were healthy and took no medicine when they skipped coverage. A retiree who passed on a drug plan at 65 because nothing was prescribed still has each uncovered month added to the count once the 63-day line is crossed.
Extra Help and creditable coverage keep the charge off
Medicare.gov says people who receive Extra Help do not pay the late-enrollment penalty while they get it. Extra Help is the federal program that pays Part D premiums, deductibles and part of drug costs for people with limited income and resources. The 2026 limits on its page are $23,940 in income and $18,090 in resources for an individual, and $32,460 and $36,100 for a married couple.
People with full Medicaid, those whose state pays their Part B premium through a Medicare Savings Program and those who receive Supplemental Security Income get Extra Help automatically. Everyone else applies through the Social Security Administration at ssa.gov/medicare/part-d-extra-help, and counselors at the State Health Insurance Assistance Programs, listed at shiphelp.org, help with the application for free.
For the 2027 plan year, the Extra Help page lists a $0 plan premium and a $0 deductible, with copays of up to $5.80 for a generic drug and $14.40 for a brand-name drug at participating pharmacies. Once total drug costs reach $2,400, covered drugs cost $0. A penalty that Extra Help waives is worth checking before any payment is set up.
When a drug plan ends, the 63-day clock starts
The 63-day rule matters most in the fall, when plans leave. KFF estimates that 1.2 million people in stand-alone drug plans will have their plan terminated at the end of 2026, including about 950,000 in CVS Health’s SilverScript Choice, which is ending in 13 regions, and about 190,000 in HealthSpring Extra Rx, which is ending in 16.
KFF says those members must choose a new stand-alone plan or move to a Medicare Advantage plan with drug coverage to keep a benefit, and that some who stay in their current plan could face sizable premium increases. A member who lets the termination pass without choosing begins a gap on Jan. 1, and the 63rd day of that gap is March 4.
CMS says the annual enrollment period runs Oct. 15 through Dec. 7 and projects the average stand-alone drug plan premium rising from $35.09 to $36 in 2027. CMS Administrator Dr. Mehmet Oz urged beneficiaries “to use Open Enrollment as an opportunity to review their coverage.” For a member whose plan is ending, that review also decides whether a gap ever begins.
The drug cap does not erase the penalty
Medicare.gov lists the Part D out-of-pocket cap at $2,100 for 2026 and $2,400 for 2027, with the deductible cap rising from $615 to $700. The cap limits what a person pays for covered drugs once spending reaches it, and the penalty works differently: it is added to the premium and follows the person from plan to plan.
Because a gap of 62 days costs nothing and a gap of 63 days starts a count that lasts as long as the person has drug coverage, the date the last coverage ended is the number that matters. Anyone whose plan is ending Dec. 31 already has that date, and Dec. 7 is the last day of the regular window to land in a new plan before the clock starts.
Skipped drug coverage because nothing was prescribed?
A drug-coverage gap of 63 days starts a penalty that lasts as long as a retiree has Part D, and the same fall that ends hundreds of thousands of drug plans is when new gaps begin.
Cut Your Medicare Bill covers the Medicare costs around that penalty, including the $2,100 drug cap for 2026 and what counts toward it, 2026 Medicare costs at a glance on one table, and the surcharge appeal with Form SSA-44 after retirement, divorce or a spouse’s death.
Get the drug cap, the Form SSA-44 appeal and the 2026 costs table in Cut Your Medicare Bill →
This article was produced with AI assistance and edited for accuracy against the sources linked above.
