If a client has Medicare Part D and then cancels their Part D coverage at a later date, would the client receive a penalty?

It depends. If a client cancels their Medicare Part D coverage, they will not be charged a penalty for re-enrolling at a later point - as long as they had creditable prescription drug coverage for the entire time they did not have Part D. If a client cancels their Medicare Part D coverage and did not have creditable prescription drug coverage, then they will be charged a penalty based on how many months they did not have creditable coverage.