Penalty (Health Care) Law and Legal Definition

Penalty in the context of health care refers to the amount that get added to the monthly medicare part B premium or to the medicare prescription drug plan premium, for not getting enrolled in the plan in the initial enrollment period. Medicare beneficiaries who hold a medigap policy with drug coverage and then enroll in a Part D Plan will have to pay a late enrollment penalty if they do not enroll within the time prescribed by the initial enrollment period. However, few beneficiaries holding a medigap policy with a drug benefit that is considered creditable coverage is exempted from penalty.