What is the purpose of the Late Enrollment Penalty (LEP)?

• A. A government grant.
• B. A reduction in premiums after five years.
• C. A one-time enrollment bonus.
• D. An amount added to the monthly plan premium if they did not enroll when first eligible or lacked creditable coverage for 63+ days.

Answer: (D)

Late Enrollment Penalty is a mechanism to encourage people to enroll in drug coverage when they’re first eligible and to account for the higher risk of gaps in coverage. It isn’t a grant or a bonus, and it isn’t one-time. If you didn’t enroll when first eligible or you lacked credible coverage for 63 or more days, an amount is added to your monthly premium for as long as you have the plan. The longer the period without coverage, the larger the penalty, and it stays with you with each monthly premium thereafter. This is why the correct description is an ongoing premium addition tied to lapses in creditable coverage beyond the 63-day window.