What best describes the Late Enrollment Penalty (LEP)?

The Late Enrollment Penalty (LEP) specifically refers to the additional amount added to a beneficiary's premium if they do not enroll in Medicare Part D (prescription drug coverage) during their initial eligibility period and later decide to enroll. This penalty is calculated based on the number of months the individual was eligible but did not have any credible prescription drug coverage. Therefore, the correct description highlights that it is a penalty incurred for delaying enrollment beyond the initial eligibility window.

This concept is significant because it encourages timely enrollment and underscores the importance of maintaining health coverage to avoid extra costs in the future. The penalty is meant to ensure that beneficiaries understand the value of enrolling when they first have the opportunity, as waiting can lead to higher overall costs.