Medicare Late Enrollment Penalties, and How to Avoid Them

Three penalties, not one

People tend to think of this as a single penalty. It is three, attached to three different parts of Medicare, and you can owe more than one at the same time. Which one can catch you depends on the Medicare enrollment periods you used: the seven months around the month you turn 65, the eight months after job coverage ends if you were still working, or January to March if you missed both.

• Part A: Only affects the minority who have to buy Part A rather than getting it premium-free.
• Part B: The one most people need to watch, and the most expensive over a lifetime.
• Part D: Triggered by a gap in drug coverage, even if you never take prescriptions.

The Part A penalty, and why most people never see it

Most people get Part A without a premium, so this one rarely applies. It only bites if you have to buy Part A and did not sign up when first eligible. The premium goes up 10%, and you pay the higher amount for twice the number of years you delayed: wait 2 years and you pay it for 4. Unlike the other two, this penalty ends. For reference, buying Part A in 2026 costs $311 a month with 30 to 39 quarters of Medicare taxes, or $565 with fewer than 30.

The Part B penalty is the expensive one

Your Part B premium rises 10% for each full 12-month period you could have had Part B and did not take it, and you keep paying it for as long as you have Part B. Medicare counts the uncovered months from the end of your Initial Enrollment Period to the month you sign up, and months when you had coverage through current employment do not count against you. On the 2026 standard premium of $202.90, somebody who went two full years without coverage pays 20% more, every month, permanently.

The Part D penalty, even if you take no medication

This one catches people who feel they do not need drug coverage. Go 63 days or more in a row without Part D or other creditable coverage after your Initial Enrollment Period ends and a penalty is added to your Part D premium, and you keep paying it for as long as you hold a Medicare drug plan, including the drug coverage inside a Medicare Advantage plan. It is 1% of the national base beneficiary premium for each full month you went uncovered, which CMS set at $41.33 for 2027, rounded to the nearest 10 cents. Twenty uncovered months works out to about $8.30 a month. Because the base premium is reset every year, the penalty moves with it, and you keep paying it for as long as you have drug coverage, including drug coverage inside a Medicare Advantage plan.

• Creditable coverage is the test: Drug coverage expected to pay, on average, at least as much as standard Medicare drug coverage.
• Extra Help cancels it: If you qualify for Extra Help, you do not pay the Part D penalty at all.
• Keep the annual notice: Employer, union, VA and FEHB plans send a yearly notice saying whether their drug coverage is creditable. You may need to produce it later.

The exception that saves people the most money

You can delay Medicare without any penalty if you have the right kind of coverage, and the test is narrower than most people assume. It has to be a group health plan based on current work, yours or your spouse's. When that job or coverage ends you get 8 months to sign up for Part B and 63 days to get drug coverage in place. There is a second exemption worth knowing: Extra Help cancels the Part D penalty outright, so if you qualify for Extra Help you never pay it.

• Small employers are the trap: If the company has fewer than 20 employees, Medicare usually pays first and you may need to take Part B at 65 anyway. Confirm with the employer rather than assuming.
• Federal employees: FEHB coverage through current work lets you delay Part B, and its drug coverage is generally creditable for Part D.
• TRICARE: If you are entitled to premium-free Part A, you generally must take Part B to keep TRICARE For Life.

Coverage that does not protect you

These feel like insurance, and for penalty purposes they are not. Each of them leaves the clock running.

• COBRA: Your 8-month window starts when the job ends, not when COBRA does.
• Retiree coverage: It is not based on current employment, however good it is.
• Marketplace coverage: An ACA plan does not let you delay Part B penalty-free.

If you think a penalty is wrong

Penalties are calculated from records, and records can be wrong. For Part B, contact Social Security and ask for a review. For Part D, your drug plan sends you a letter stating the penalty, and you can request a reconsideration within 60 days of that letter. Keep the creditable coverage notices your previous plans sent you, because they are the evidence.

The short version

If you remember nothing else: Part A adds 10% for twice the years you waited and then stops. Part B adds 10% per full year, for life. Part D adds 1% of the base premium per uncovered month, for life. Coverage from current employment is the only reliable way to delay any of them without paying more. Once you are enrolled, your Medicare benefits options open up properly.

Common questions

More in Medicare 101

• Turning 65: Your complete guide to starting Medicare
• Medicare Eligibility: Who Qualifies, and When
• How to Enroll in Medicare, Step by Step
• Medicare and Working Past 65: When to Enroll and What to Keep
• The Parts of Medicare, Explained: A, B, C and D
• Medicare Enrollment Periods: Every Window Explained
• Medicare Costs: What You'll Actually Pay
• Medicare Advantage vs. Medicare Supplement: How to Choose
• Medicare Prescription Drug Coverage: Where It Comes From and How It Works