Medicare Late Enrollment Penalty: Costs and How to Avoid It

Medicare Late Enrollment Penalty: Costs and How to Avoid It

The Medicare late enrollment penalty is a permanent surcharge on your premium. You owe it if you skip Medicare coverage, or go without drug coverage, when you were first eligible and had no qualifying coverage. In 2026 the Part B penalty is 10% of the premium for every full 12 months you waited. The Part D penalty is 1% of a national benchmark for every full month you went without. You can usually avoid both by enrolling on time or by keeping coverage that counts.

Below you’ll find how each penalty is calculated, worked examples with 2026 numbers, the situations that protect you, and what to do if a penalty has already shown up on your bill.

TL;DR

• Part B: 10% added to the standard 2026 premium of $202.90 for each full 12-month period you could have enrolled but didn’t. It lasts as long as you have Part B.
• Part D: 1% of the $38.99 national base beneficiary premium for each full month without creditable drug coverage. It is also permanent.
• Part A: Only applies if you have to pay a Part A premium. It is 10% extra, charged for twice the number of years you delayed.
• How to avoid it: Enroll in your 7-month Initial Enrollment Period, or keep job-based coverage that qualifies and use a Special Enrollment Period when it ends. Extra Help also removes the Part D penalty.
• Already assessed? Switching plans does not erase it, but you can ask for a reconsideration if it’s wrong.

Table of Contents

• Why Medicare charges a late enrollment penalty
• The Part B late enrollment penalty
• The Part D late enrollment penalty
• The Part A penalty
• How to avoid the penalty
• Real situations, and how the penalty applies
• What to do if you were charged a penalty
• Getting help from Almond Insurance
• FAQ
• Sources

Why Medicare charges a late enrollment penalty

Medicare works like other insurance: it needs healthy people paying in, not only people who sign up once they’re sick. The penalty is meant to encourage continuous coverage. It is not a fine for a mistake, and that is why it sticks around for as long as you have the coverage.

The rule is simple: sign up during your Initial Enrollment Period unless you have other coverage similar in value to Medicare, such as coverage from an employer. If you don’t, you may owe a penalty.

Your Initial Enrollment Period lasts seven months. It starts three months before the month you turn 65 and ends three months after. Miss that window with no qualifying coverage, and both a coverage gap and a penalty can follow.

The Part B late enrollment penalty

Part B covers doctor visits, outpatient care and preventive services. Most people pay a monthly premium, which is $202.90 as a standard amount in 2026.

How it’s calculated

For each full 12-month period you were eligible for Part B but didn’t sign up, 10% is added to your premium. Partial years don’t count. A delay of 11 months costs nothing extra in penalty terms (though you may still face a gap in coverage), while 12 months triggers the first 10%.

Here is what that looks like on the 2026 premium:

The two-year row matches Medicare’s own example. The other rows are our arithmetic on the same $202.90 figure. Your actual amount can differ if you pay an income-related surcharge. Social Security explains how higher incomes raise Part B and drug coverage premiums.

The penalty percentage is fixed for life, but the dollar amount rises each year as the standard premium rises, because the percentage is applied to the new premium.

When Part B is easy to delay safely

If you or your spouse are still working and have group health coverage through that employment, you can usually wait on Part B without a penalty. The key is what happens when that job or coverage ends. You then get a Special Enrollment Period, and you need to use it. Our guide to COBRA versus Medicare walks through why retiree and COBRA coverage don’t give you the same protection as active employment coverage.

The Part D late enrollment penalty

This is the penalty people search for most, and the one that surprises them most. Part D is the prescription drug benefit, either a stand-alone plan or built into a Medicare Advantage plan.

How it’s calculated

Medicare multiplies 1% of the national base beneficiary premium, which is $38.99 in 2026, by the number of full months you went without Part D or other creditable drug coverage after your Initial Enrollment Period ended. The result is rounded to the nearest 10 cents and added to your monthly premium.

The 14-month row is Medicare’s published example. The rest are our own calculations from the same $38.99 base, rounded to the nearest 10 cents.

Those numbers look small, and that is the trap. A $9.40 monthly penalty is about $113 a year. If you live to 90 after a late start at 65, that adds up to thousands of dollars, and because the base premium changes each year, the dollar amount can drift upward.

Three things that surprise people

It doesn’t depend on your plan. The penalty uses a national figure, not your plan’s price. Two people with different plans and the same number of uncovered months pay the same penalty.

A $0 premium plan can still carry a bill. The penalty is part of your plan premium, so you pay it to the carrier even if the plan itself is free. Non-payment of premiums can lead to disenrollment.

Switching plans doesn’t reset it. Changing carriers during open enrollment will not remove an existing penalty. It follows you. It generally changes only in specific cases, such as qualifying for Extra Help or a new Initial Enrollment Period tied to a disability, as CMS plan guidance for 2026 describes.

What counts as creditable coverage

Creditable drug coverage is coverage that pays, on average, at least as much as Medicare’s standard drug benefit. Employers must tell you each year whether their drug coverage is creditable. Keep every one of those notices. If your record is ever questioned, they are your proof.

Watch out for COBRA. Medicare does not treat COBRA as creditable drug coverage for Part D purposes, so relying on it instead of enrolling can trigger the penalty. In general, a continuous stretch of 63 days or more without creditable coverage is what starts the count, according to CMS guidance on creditable coverage. Check your own dates carefully, because a few weeks between jobs can matter.

The Part A penalty

Most people get Part A premium-free because they or a spouse paid Medicare taxes for at least 40 quarters. If you do have to buy Part A, a late sign-up carries a different kind of penalty: 10% added to your monthly premium, charged for twice the number of years you could have enrolled but didn’t. So a two-year delay means paying the extra amount for four years, then it stops. This is the one penalty that ends.

If you have a work history, you probably won’t face this. If you have a short work record, ask Social Security about your quarters before you decide to wait.

How to avoid the penalty

1. Mark your Initial Enrollment Period. Count three months before your 65th birthday month. This is your best chance to enroll in Part B and a Part D plan or an Advantage plan with drug coverage. Our explainer on Medicare enrollment periods lays out the full calendar.
2. Confirm whether your current coverage is creditable. Ask your HR department in writing. Don’t assume.
3. Plan the handoff. If you retire or lose coverage, a Special Enrollment Period opens. Common triggers include losing job-based coverage or moving out of a plan’s service area. The details of each trigger differ, so read the rules before the date arrives, not after.
4. Keep your paperwork. Save creditable coverage notices, termination letters and old plan cards.
5. Check Extra Help. People who get Extra Help are exempt from the Part D penalty. Low-income readers should also look at our guide to Medicare Savings Programs, which can help with Part B costs.

What if you’ve already missed the window?

You have to wait for the next opening. For Part D, that is usually the fall Annual Enrollment Period. If that timing is on your mind, this guide to Medicare open enrollment dates and what changes is a handy reference for the calendar.

In practice, the sooner you enroll after the window closes, the smaller the penalty grows. Every extra month on the sidelines adds to it.

Real situations, and how the penalty applies

You’re still working at 65 with employer coverage. Usually you can delay Part B and keep your employer drug coverage if it’s creditable. Ask for the written notice, and plan your Special Enrollment Period before you retire.

You retire at 66 and rely on COBRA. This is the classic mistake. COBRA doesn’t stop the Part B clock the way active employment coverage does, and it isn’t creditable for Part D. Enroll as soon as you leave work, not when COBRA runs out.

You’re healthy and take no prescriptions. Skipping Part D feels logical. But the months without creditable coverage still count, and the penalty is permanent. Even a low-cost plan can protect you from a lifetime add-on, and Medicare notes it can be wise to choose a plan with a low monthly premium even if you take few drugs now.

You have a condition that qualifies you before 65. Eligibility can start earlier than 65 for some people. For example, our overview of ALS and Medicare eligibility explains how enrollment works for that case.

What to do if you were charged a penalty

When you join a drug plan, the plan sponsor checks your coverage history through CMS data to see whether you owe a penalty. If the history is wrong, you can ask the plan for a reconsideration. Here is how to approach it:

• Read the notice you received and note the number of months charged.
• Gather your proof of coverage: employer notices, plan cards, letters from a prior insurer.
• Contact the plan and say plainly that you are disputing the penalty. Send copies, never originals.
• Keep a record of dates and names.

Free, unbiased help is available too. In Illinois, the Senior Health Insurance Program offers free statewide health insurance counseling to Medicare beneficiaries and their caregivers.

Getting help from Almond Insurance

We’re a Medicare agency in Rockford, Illinois, serving Northern Illinois and Southern Wisconsin. If you’re turning 65, retiring, or reviewing a plan you’ve had for years, we can walk through your coverage history, work out which window applies, and compare Medicare Advantage, Medicare Supplement and Part D options in plain language. You don’t pay us directly for our guidance. Carriers compensate us when you enroll in a plan.

Start with our new-to-Medicare guidance, or look at our Part D prescription review if you want to check your drug coverage. You can also see everything we offer on our services page.

FAQ

Is there a penalty if you don’t enroll in Medicare at 65?

It depends on your coverage. If you have no qualifying coverage and skip Part B for 12 full months or more, you’ll pay a permanent 10% increase for each 12-month period. If you have active employer coverage, you can usually delay without a penalty. Part D has its own separate rule, based on months without creditable drug coverage.

How can I avoid the Medicare Part D penalty?

Enroll in a drug plan during your Initial Enrollment Period, or keep creditable coverage without a long gap. Keep your employer’s creditable coverage notices. If you qualify for Extra Help, you are exempt from the penalty.

Does the Part D penalty ever go away?

In most cases, no. It lasts as long as you have Medicare drug coverage. Changing plans doesn’t remove it. It can change if you qualify for Extra Help or if you were charged in error and win a reconsideration.

Does the Part B penalty apply if I had COBRA?

COBRA generally does not give you the same protection as coverage from current work. Once your employment coverage ends, your Special Enrollment Period starts, and waiting for COBRA to run out can result in a penalty. See our COBRA and Medicare guide and confirm your dates with Social Security.

Sources

• Avoid late enrollment penalties | Medicare.gov
• When does Medicare coverage start? | Medicare.gov
• How much does Medicare drug coverage cost? | Medicare.gov
• CY 2026 Chapter 4 creditable coverage and Part D LEP guidance | CMS
• Medicare Ready | Social Security Administration
• Medicare Premiums | Social Security Administration
• POMS HI 03001.001, Medicare Part D program | SSA
• Understanding Medicare’s Late Enrollment Penalties | NCOA
• Senior Health Insurance Program | Illinois Department on Aging

Recommended

• COBRA vs Medicare: Avoid Penalties With Eight Months to Enroll
• Medicare enrollment periods, explained simply
• ALS and Medicare: Eligibility and Enrollment Basics