Utah · Medicare Part D · 2026

Medicare Part D Late Enrollment Penalty: A Utah Guide (2026)

Almost nobody skips Medicare's drug coverage on purpose. They skip it because they did not think they needed pills, or because a letter about "creditable coverage" looked like junk mail. The bill for that arrives years later, every single month.

Utah Retirement Income Data Desk

Reviewed by Brian Penner, Retirement income & long-term care planner · Published August 26, 2026

Here is the short answer. Medicare charges a permanent late fee to people who could have had drug coverage and did not take it. In 2026 that fee is 1% of $38.99 for each full month you went uncovered, rounded to the nearest dime and bolted onto your drug plan premium for the rest of your life. You avoid it in one of two ways: enroll in a Medicare drug plan when you are first eligible, or keep creditable drug coverage — coverage expected to pay at least as much as Part D does — and never let a gap run past 62 days.

This is education, not advice. What follows is what the federal rules actually say, what the arithmetic works out to, and what Utah's own enrollment numbers show about who is exposed.

What triggers the Part D late enrollment penalty?

CMS states the rule in one sentence: a beneficiary may incur a late enrollment penalty if there is a continuous period of 63 days or more, at any point after the end of their Part D Initial Enrollment Period, during which they were eligible to enroll but were not enrolled in a Part D plan and were not covered by any creditable prescription drug coverage.

Three things in that sentence do the damage.

• "At any time after" — this is not a one-shot test at 65. A retiree in Ogden who enrolled on time at 65, dropped her drug plan at 71 because she took no medications, and went two years bare has a 24-month gap. The clock never closes.
• "63 days or more in a row" — a short gap is forgiven. A 62-day gap between a job plan ending and a Medicare drug plan starting costs nothing. Day 63 changes that.
• "Any creditable prescription drug coverage" — the burden of knowing whether your coverage is creditable falls on you, and the answer arrives once a year in an envelope most people throw away.

One more mechanic worth understanding: you do not get a bill the day the gap opens. Nothing happens until you finally join a Medicare drug plan. Then the plan runs the history, and the letter arrives — often years and several hundred dollars of accrued percentage later.

How much is the penalty in 2026?

The penalty is tied to the national base beneficiary premium, a figure CMS publishes every summer. For 2026, CMS set it at $38.99. Your penalty is 1% of that number for each full, uncovered month, rounded to the nearest $0.10 and added to whatever your drug plan charges.

Sources: CMS, 2026 Medicare Part D Bid Information (July 28, 2025); CMS, Creditable Coverage and Late Enrollment Penalty; Medicare.gov, Part D late enrollment penalty.

Run at 2026 rates, the arithmetic looks like this:

Calculated as 1% x $38.99 (the 2026 national base beneficiary premium) x full uncovered months, rounded to the nearest $0.10, per the method published at Medicare.gov, Part D late enrollment penalty. Because the base beneficiary premium is reset annually, the dollar amount of an existing penalty can rise or fall in future years even though the percentage does not change.

2026 monthly Part D late enrollment penalty by length of uncovered gap. Source: Medicare.gov penalty formula applied to the 2026 national base beneficiary premium of $38.99 (CMS).

Notice the shape of it. A ten-year gap adds $46.80 a month — more than the base premium itself. And that surcharge is paid on top of the plan premium, in addition to the deductible (no 2026 Medicare drug plan may charge more than $615) and your share of drug costs up to the $2,100 annual out-of-pocket cap. The penalty buys you nothing. It is pure surcharge.

What actually counts as "creditable" drug coverage?

Creditable prescription drug coverage is coverage expected to pay, on average, at least as much as standard Medicare drug coverage. That is the whole test. It is not about how good the plan feels, or how much you like your pharmacy. It is an actuarial comparison the plan sponsor performs and then discloses.

CMS's own examples, and the ones Medicare.gov adds, sort roughly like this:

Sources: CMS, Creditable Coverage and Late Enrollment Penalty (citing 42 CFR 423.56); Medicare.gov, Part D late enrollment penalty. Individual plans vary — the plan sponsor's written notice is what governs, not this table.

The row that causes the most trouble is the first one. Employer and union drug coverage is usually creditable, and people reasonably assume theirs is. But CMS requires every entity offering drug coverage to make an annual determination of creditable status and disclose it — precisely because the answer can change from year to year without the member noticing a thing about their benefits.

Why October 15 is the date that protects you

Two deadlines sit inside the federal creditable-coverage rules, and only one of them is aimed at you.

1. To you, before October 15 each year. Entities offering prescription drug coverage must give a written disclosure notice to all Medicare-eligible people covered under the plan, annually, prior to October 15. That obligation extends to Medicare-eligible active workers and their dependents, Medicare-eligible people on COBRA and their dependents, Medicare-eligible people with disabilities on the plan, and retirees and their dependents.
2. To CMS, within 60 days of the plan year. Separately, the plan sponsor must file an online Disclosure to CMS Form reporting the plan's creditable status — annually within 60 days of the start of the plan year, within 30 days if the drug plan terminates, and within 30 days of any change in creditable status.

October 15 is not an accident. It is the day Medicare's Annual Enrollment Period opens, which runs October 15 through December 7. The federal design is that you learn whether your current coverage is creditable just before the window in which you can do something about it.

CMS also updated this guidance for the current plan year. In a July 22, 2025 memo, CMS revised the CY 2026 Part D creditable coverage period determinations and late enrollment penalty guidance — clarifying policy and updating a requirement for creditable coverage notices — effective for all enrollments with an effective date on or after January 1, 2026. If your plan's notice looks different this fall than it did last fall, that is why.

How many Utahns are actually exposed to this?

Here is where the national rule meets a state number. According to the CMS Medicare Monthly Enrollment file for May 2026, Utah had 488,797 Medicare beneficiaries. Of those, 391,825 were enrolled in Medicare drug coverage — 140,690 in standalone Part D plans and 251,135 through a Medicare Advantage plan that includes drugs.

That leaves 96,972 Utahns — 19.8% of the state's Medicare population — with no Medicare drug coverage at all.

Read that number carefully, because it is easy to misread. It is not a count of people racking up penalties. The large majority almost certainly hold creditable coverage from somewhere else: an employer plan, TRICARE For Life, the VA, FEHB, a retiree plan. Utah has a high rate of working past 65 and a large military-connected population, both of which push that share up for entirely benign reasons. The number is a measure of exposure, not of failure — it is the population for whom the creditable-coverage notice is the only thing standing between them and a permanent surcharge.

CMS Medicare Monthly Enrollment public use file, May 2026. "With Part D drug coverage" combines standalone prescription drug plans and Medicare Advantage plans that include drug coverage. "Without" is the remainder — beneficiaries not enrolled in any Medicare drug plan, most of whom hold creditable coverage from another source. Source: data.cms.gov — Medicare Monthly Enrollment.

The county spread is the interesting part. Cache County sits lowest at 15.3% without Medicare drug coverage. Tooele (25.6%), Weber (25.3%), and Davis (24.0%) sit highest — roughly a quarter of beneficiaries. Those three counties are also where Utah's military-connected retiree population is concentrated, around Hill Air Force Base and the Tooele Army Depot, and TRICARE For Life and VA drug benefits are both creditable coverage. That is very likely most of the gap, and it is the good kind of gap.

But the same statistic cuts the other way for the households in Davis or Weber County who are not military-connected, dropped their drug plan when the pills stopped, and have nothing in writing. There is no way to tell those two groups apart from the outside. There is a very easy way to tell from the inside: look for the notice.

What if you already have a penalty — can it be removed?

Sometimes, yes. Medicare allows a reconsideration, which is decided by a Medicare contractor that is not connected with your drug plan. The mechanics matter:

• Your drug plan sends you the form and instructions when it tells you that you owe a penalty.
• You must return it within 60 days of the date on that letter. File later and you have to explain why it is late.
• Send proof: a copy of a prescription drug card, or a notice of creditable prescription drug coverage from an employer or union plan. This is the whole ballgame — the appeal is won with paper.
• Medicare's contractor generally decides within 90 days, and may take up to 14 more days for good cause.
• You must pay the penalty while you appeal. By law it is part of your premium, and drug plans can disenroll members who do not pay their premiums, penalty portion included.
• If you already switched drug plans while paying a penalty, you generally do not get another chance to ask for reconsideration.

If the contractor agrees, the penalty is removed or reduced and the plan sends a corrected premium — and tells you whether a refund is coming. There is one other exit: people who qualify for Extra Help, the Part D Low-Income Subsidy, do not pay a late enrollment penalty at all. We covered who qualifies in our guide to Extra Help and the Medicare Savings Programs in Utah.

Does Part B work the same way?

Same idea, much bigger number, and the arithmetic runs on years instead of months. The Part B late enrollment penalty is 10% of the standard Part B premium for each full 12-month period you could have signed up and did not.

Medicare.gov's own 2026 example: wait two full years and you owe a 20% penalty on the standard premium of $202.90 — that is $40.58 added, for a Part B premium of $243.50 a month. Like the Part D penalty, it generally lasts as long as you have Part B. Unlike Part D, a Special Enrollment Period or enrollment in a Medicare Savings Program can keep you out of it entirely.

The reason both penalties exist is the same: Medicare's math only works if healthy people join at the same time as sick ones. The reason Utah retirees run into them is also the same — a job that continued past 65, a spouse's plan, a move, a coverage change nobody explained. If that describes you, our guide to working past 65 in Utah walks through the enrollment timing in detail.

A short checklist before this year's enrollment window

1. Find your creditable coverage notice. It should arrive before October 15. If it does not, ask your benefits office, retiree plan administrator, or COBRA administrator for it in writing.
2. Re-check it every year. A plan that was creditable last year is not automatically creditable this year — that is exactly why CMS requires an annual determination.
3. Count your days at any transition. Retiring, losing a spouse's coverage, aging off COBRA, moving from an ACA plan to Medicare — the 63-day clock starts when the creditable coverage stops.
4. Do not drop drug coverage because you take no drugs. This is the single most common way a healthy 70-year-old buys a lifetime surcharge. Low-premium drug plans exist for exactly this reason.
5. If you get a penalty letter, do not just pay it quietly. Check the dates against your records. If you had creditable coverage during any of the months counted, that is a reconsideration.
6. Use the free, unbiased help. Utah's SHIP counselors provide free one-on-one Medicare counseling in every county through the Utah Division of Aging and Adult Services and the Utah Insurance Department. You can also call 1-800-MEDICARE or compare every plan yourself at Medicare.gov.

Frequently asked questions

Sources

• Medicare.gov — Part D late enrollment penalty (formula, $38.99 base, 63-day rule, reconsideration process): medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/part-d-late-enrollment-penalty
• Medicare.gov — Avoid late enrollment penalties (Part B: 10% per full 12 months; 2026 example on $202.90): medicare.gov/basics/costs/medicare-costs/avoid-penalties
• Medicare.gov — How much does Medicare drug coverage cost? ($615 maximum 2026 deductible; $2,100 out-of-pocket cap): medicare.gov/health-drug-plans/part-d/basics/costs
• Medicare.gov — Fact Sheet: The Part D Late Enrollment Penalty (CMS Product No. 11222): medicare.gov/publications/11222-part-d-late-enrollment-penalty.pdf
• CMS — Creditable Coverage and Late Enrollment Penalty (63-day rule, examples of creditable coverage, CY 2026 guidance revision effective January 1, 2026): cms.gov/medicare/enrollment-renewal/part-d-plans/creditable-coverage-and-late-enrollment-penalty
• CMS — Creditable Coverage (annual disclosure notice before October 15; Disclosure to CMS Form within 60 days of plan year): cms.gov/medicare/prescription-drug-coverage/creditablecoverage
• CMS — 2026 Medicare Part D Bid Information and Premium Stabilization Demonstration Parameters (2026 national base beneficiary premium of $38.99), July 28, 2025: cms.gov/newsroom/fact-sheets/2026-medicare-part-d-bid-information-and-part-d-premium-stabilization-demonstration-parameters
• CMS — 2026 Medicare Parts A & B Premiums and Deductibles (standard Part B premium of $202.90): cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles
• CMS — Medicare Monthly Enrollment public use file, May 2026 (Utah statewide and county enrollment, Part D coverage): data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-monthly-enrollment
• Utah Insurance Department — Medicare, Medigap, and Medicare Advantage consumer information: insurance.utah.gov/consumers/health-insurance/medicare
• Utah Division of Aging and Adult Services — free SHIP Medicare counseling: daas.utah.gov

About this article. Written by the Utah Retirement Income Data Desk and reviewed by Brian Penner, Retirement income & long-term care planner. Educational only — not financial, tax, or legal advice. Utah Retirement Income is a licensed independent insurance agency (NPN 16493717). We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Assistance Program (SHIP) to get information on all of your options. We are not a government agency and are not connected with or endorsed by the United States government, the Centers for Medicare & Medicaid Services, the federal Medicare program, Utah Medicaid, or the Social Security Administration. A plan with a $0 monthly premium is not free — you still pay the Part B premium and any cost sharing. Insurance and annuity guarantees are subject to the claims-paying ability of the issuing company; no investment return is guaranteed. Premiums, penalties, and eligibility rules change — confirm your own situation at Medicare.gov or with a licensed agent. If you call or text us, you consent to be contacted about your request; message and data rates may apply, and you can opt out at any time.