The penalty for not enrolling in a Medicare Prescription Drug Plan (PDP) at age 65 is typically assessed through the Medicare Part D late enrollment penalty. This penalty is calculated based on the number of months you go without Part D or creditable prescription drug coverage.
The formula for calculating the penalty is as follows:
Take 1% of the “national base beneficiary premium” for the year.
Multiply that number by the number of full, uncovered months you were eligible but didn’t enroll.
The result is then rounded to the nearest $0.10 and added to your monthly Medicare Part D premium.
It’s important to note that this penalty is a lifelong cost, and it is designed to encourage individuals to enroll in a Part D plan during their initial enrollment period or when they first become eligible for Medicare. If you’re eligible and choose not to enroll, it’s advisable to carefully consider the potential long-term financial impact of the late enrollment penalty.