Why penalties exist
Medicare’s premiums work because people enroll when they become eligible, not only after they get sick. The late enrollment penalties are the system’s way of discouraging waiting, and the reason they sting is that most of them are permanent: they are added to your premium for as long as you have that coverage.
The Part B penalty
If you go 12 or more full months without Part B after becoming eligible, and you did not have other creditable coverage, your Part B premium generally goes up 10 percent for each full 12-month period you waited. That increase does not expire. It is recalculated on top of each year’s premium, every year, for life.
The Part D penalty
The Part D penalty accrues month by month: generally 1 percent of the national base premium for every month you went without Part D or other creditable drug coverage after your window closed, with a 63-day grace period. Like the Part B penalty, it is added to your premium for as long as you have the coverage.
The 63-day rule for drug coverage
The Part D clock is less forgiving than people expect. Go 63 or more days in a row without Part D or other creditable drug coverage after your Initial Enrollment Period ends, and the penalty months start counting. Creditable is a specific standard, coverage expected to pay at least as much as standard Medicare drug coverage, and your plan is required to tell you each year whether its coverage qualifies. Keep those notices.
When penalties do not apply
The penalties are avoidable, and the most common protection is creditable coverage. If you kept employer coverage past 65, you generally get a Special Enrollment Period to sign up later without penalty; the rules for that situation are covered in Still Working at 65? The key is that the coverage must count as creditable, and gaps longer than the allowed windows start the clock.
Waiting also means waiting
Beyond the surcharges, late enrollment usually means enrolling during the General Enrollment Period, January 1 to March 31, with coverage starting the month after you sign up. The penalty is the permanent cost; the waiting is the immediate one, and it can mean months without coverage you thought you had.
The simple way to avoid all of this
Know your dates. Your seven-month Initial Enrollment Period is laid out in our month-by-month timeline, and a ten-minute conversation before your window opens costs nothing and beats a permanent surcharge every time.
- Part B: generally +10% for each full 12-month period you waited, for life
- Part D: generally +1% of the national base premium per month without creditable coverage
- Creditable employer coverage usually protects you and earns a Special Enrollment Period
- Know your window and the penalties never apply to you
Common questions
I have COBRA. Does that protect me from the Part B penalty?
COBRA is generally not treated like active employer coverage for this purpose. This is one of the most expensive misunderstandings in Medicare, so check your situation before relying on it.
Keep reading
Medicare BasicsTurning 65 in Florida: Your Month-by-Month Medicare TimelineMedicare BasicsStill Working at 65? What to Do About Medicare and Employer CoverageMedicare BasicsMedicare Part A, B, C and D Explained in One Page
We do not offer every plan available in your area. Currently we represent 12 organizations which offer [ NUMBER ] products 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.