Miss the deadlines, and you could face Medicare late enrollment penalties that stick with you for life and cost you more every month.
Medicare provides essential health coverage for people 65 and older, but signing up at the right time is just as important as choosing the right plan.
The good news? These penalties are completely avoidable if you know the rules. Let’s break it down so you can keep your healthcare costs in check.
Opportunities to Enroll
If you are already receiving Social Security benefits as you approach 65, you are automatically enrolled in Medicare Part A and B.
But if you are still working and haven’t claimed Social Security yet, you will need to actively enroll as soon as you are eligible.
There are three opportunities to apply that you don’t want to miss!
- Initial Enrollment Period (IEP): This is the first time you can sign up. It starts three months before you turn 65, includes the month you turn 65, and ends three months after the month you turn 65.
- Special Enrollment Period (SEP): There are a few life events that may make you eligible for an SEP, such as losing other health coverage or moving back to the US from another country. The timing will depend on your life event, so contact a Medicare specialist if you have questions.
- General Enrollment Period (GEP): If you miss your IEP and don’t qualify for a SEP, you can sign up during the GEP between January 1 and March 31 each year, with coverage starting July 1 of the same year.
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Medicare Late Enrollment Penalty for Part A
If you don’t enroll in Medicare Part A when you’re first eligible and don’t qualify for premium-free coverage, you’ll face a Medicare late enrollment penalty that temporarily increases your monthly premium.
How the Medicare Part A Penalty Works
- The penalty adds 10% to your monthly Part A premium for every year you delay enrollment.
- You must pay this penalty for twice the number of years you delayed enrollment.
For example, if your Part A premium is $500 per month and you wait two years to enroll, your penalty would be $50 per month (10% of $500). You would pay this extra amount for four years before your premium returns to the standard rate.
How to Avoid This Medicare Penalty:
- Enroll on time: Mark your calendar and sign up during your Initial Enrollment Period (IEP) to avoid penalties.
- Qualify for premium-free Part A: If you or your spouse have worked and paid Medicare taxes for at least 10 years, you can get Part A with no monthly premium.
- Have employer coverage?: Make sure it’s creditable. If you’re still working and have health insurance through an employer, confirm that it counts as creditable coverage so you can delay Part A without a penalty.
- Check for financial assistance: If you have a low income, programs like Medicaid may help cover your Medicare Part A premiums and other costs.
Medicare Late Enrollment Penalty for Part B
If you delay signing up for Medicare Part B when you’re first eligible, you could face a Medicare late enrollment penalty that lasts for life.
The penalty adds 10% to your monthly Part B premium for every full year you didn’t enroll.
How the Medicare Penalty Works:
- For every 12-month period you delay enrollment, your Part B premium increases by 10%—permanently.
- The longer you wait, the more you’ll pay every month.
For example, if you wait two years to enroll and the standard Part B premium is $170, your penalty would be 20% of $170—an extra $34 per month. That means your new monthly premium would be $204 instead of $170, and this higher rate stays with you as long as you have Medicare Part B.
How to Avoid This Medicare Penalty:
- Sign up during your Initial Enrollment Period. Don’t wait! Enroll as soon as you’re eligible at age 65 to avoid penalties.
- Verify employer coverage is creditable. If you’re still working and have insurance through your job or your spouse’s job, confirm that it meets Medicare’s creditable coverage requirements before delaying Part B.
- Prevent coverage gaps. If you’re losing employer coverage, enroll in Part B before it ends to avoid penalties.
- Understand what doesn’t count as creditable coverage. COBRA and retiree health plans are NOT creditable for delaying Medicare Part B—don’t assume they qualify.
- Stay updated on Medicare rules. Policies can change, so always double-check deadlines to ensure you enroll on time and avoid extra costs.
Medicare Late Enrollment Penalty for Part D
If you don’t sign up for Medicare Part D when you’re first eligible and don’t have creditable prescription drug coverage, you’ll face a late enrollment penalty that permanently increases your monthly premium.
How the Medicare Part D Penalty Works
- The penalty is 1% of the national base beneficiary premium for every month you go without creditable drug coverage after becoming eligible.
- This amount is rounded to the nearest $0.10 and added to your monthly Part D premium for life.
For example, if you became eligible for Part D in June 2022 but didn’t enroll until December 2024—and had no creditable drug coverage—the gap would be 30 months.
- In 2025, the national base beneficiary premium is $36.78.
- The penalty would be 30% of $36.78, which equals $11.03.
- This extra amount would be added to your monthly Part D premium permanently, increasing your total monthly cost.
How to Avoid This Medicare Penalty
- Enroll in Part D as soon as you’re eligible. Signing up when first eligible helps you avoid lifelong penalty costs.
- Confirm your prescription drug coverage is creditable. If you have drug coverage through an employer or union, make sure it meets Medicare’s standards before declining Part D.
- Sign up for Part D within 63 days of losing creditable coverage. If your current prescription drug plan ends, enrolling within this timeframe prevents penalties.
- See if you qualify for Extra Help. This program helps lower-income Medicare beneficiaries pay for Part D premiums and prescription costs.
- Consider a Medicare Advantage (Part C) plan with drug coverage. Many Medicare Advantage plans include prescription drug benefits, which can satisfy the Part D requirement.
Part C and Medicare Alternatives
Medicare Part C and Alternative Coverage Options
Medicare Part C (Medicare Advantage) is optional, so there’s no penalty for not enrolling.
However, Original Medicare may not cover all your healthcare needs. Here are some options to consider:
- Medicare Advantage (Part C): Combines Parts A and B, often includes drug, vision, dental, and hearing coverage, and has lower premiums. However, provider choices are usually limited to a network.
- Medi-Share 65+: A health-sharing plan that helps with Medicare deductibles, copays, and coinsurance. It offers lower premiums and flexibility in choosing doctors but has some coverage limitations.
- Medicare Supplement (Medigap): Private insurance that helps cover Medicare’s out-of-pocket costs. It offers predictable expenses and no network restrictions but has higher premiums and usually excludes dental, vision, and drug coverage.
Medicare Late Enrollment Penalty Exceptions
Not everyone who delays Medicare enrollment will face a penalty. Certain exceptions allow you to enroll later without extra costs.
- You have creditable coverage. If you have health insurance through an employer, union, or military service (such as TRICARE or VA benefits), you can delay enrollment without a penalty, as long as the coverage is considered “creditable.”
- You qualify for a Special Enrollment Period (SEP). SEPs allow you to enroll outside of standard timeframes if you experience specific life events, such as:
- Losing employer-sponsored health coverage
- Moving outside your Medicare plan’s service area
- Returning to the U.S. after living abroad
- Gaining eligibility for Medicaid
- You qualify for Extra Help. This program assists with Medicare drug costs and waives the Part D late enrollment penalty for those who qualify.
- You were misinformed by Medicare or an employer. If you receive incorrect information that leads to a late enrollment, you may be able to request a reconsideration to remove the penalty.
These exceptions aren’t automatic, so you may need to provide proof of coverage or documentation to Medicare.
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What if I Have an Issue With an Enrollment Penalty?
It is possible to request a reconsideration.
You will need to submit the appropriate form within 60 days from the date on the letter telling you that you owe a late enrollment penalty. Include any proof that supports your case. A decision should be made within 90 days, and you will receive a letter letting you know if your penalty will be removed or not.
By law, the late enrollment penalty is part of the premium, so you need to pay it even if you don’t agree with it. You must also pay the penalty even if you’ve asked for a reconsideration while it is being reviewed.
Get Expert Help to Avoid Medicare Penalties
Navigating Medicare enrollment can feel overwhelming, and missing deadlines can lead to costly penalties that stick with you for life.
A Personal Benefits Manager can walk you through your options, help you understand key deadlines, and ensure you enroll in the right coverage—without unnecessary fees.
With the right guidance, you can make confident decisions and keep your healthcare costs as low as possible.
For Further Reading:
Lou Spatafore works for MediGap Advisors. As a PBM, his focus is to help people find the best Medicare plan for his clients. Read my full Bio.