Which statement best describes the Late Enrollment Penalty (LEP)?

• A. A reduction of benefits if you enroll late.
• B. A monthly grant for late enrollees.
• C. An amount added to monthly premium if they did not enroll in MA with Part D benefits or standalone Prescription Drug Plan when first eligible for Medicare parts A and/or B or went without creditable prescription drug coverage for 63 or more continuous days.
• D. A one-time credit to the beneficiary's account.

Answer: (C)

The important idea here is that the Late Enrollment Penalty is a added monthly cost, not a one‑time fee or a grant. It applies when you don’t enroll in a Medicare Prescription Drug Plan (standalone PDP) or in a Medicare Advantage plan with Part D when you’re first eligible, or if you go without creditable drug coverage for 63 consecutive days or more. The penalty shows up as a permanent increase to your monthly Part D-related premium for as long as you have Part D coverage.

The amount is calculated as 1% of the base beneficiary premium for each full month you went without Part D or creditable coverage after that 63‑day period. So the longer you delay, the larger your monthly premium becomes, and it stays that way each month. The base premium can change from year to year, so the penalty amount can shift accordingly. This is why it’s not a reduction, a grant, or a one‑time credit—the LEP is a continuing premium increase tied to late enrollment.