2.  What is the maximum premium penalty?

 The regulations establish no cap for the penalty premium.  Any penalty premium could be charged to the beneficiary every month for as long as s/he remains in a Medicare Part D plan.  For example, if an individual misses the Initial Enrollment Period this plan year (November 15, 2005 to May 15, 2006), the next opportunity to enroll in Part D is the Annual Coordinated Election Period (November 15, 2006 to December 31, 2006).  This individual would have been without creditable coverage between May 16, 2006 and December 31, 2006 (because enrollment during the Annual Coordinated Election Period is effective on January 1, 2007), resulting in a penalty premium of 7% of the national average premium being added to the individual's chosen Part D plan premium.  If the individual does not enroll during the first Annual Coordinated Election Period but decides to enroll in Part D during the following year (November 15, 2007 to December 31, 2007), the penalty premium rises to 19% (7% from 2006 and 12% from 2007); Part D coverage would not be effective until January 1, 2008.  The penalty is calculated based on the national average premium of plans in the year of enrollment into Part D.

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