Medicare has separate late-enrollment penalties for Part B and Part D. Both are added to your monthly premium and last for the rest of your life. Here's how each works and how to avoid them.
Part B Late Enrollment Penalty:
- Triggered when you don't enroll in Part B during your Initial Enrollment Period (IEP) and don't have other creditable coverage (like an active employer plan)
- Penalty: 10% added to your Part B premium for every 12-month period you were eligible but not enrolled
- Example: You delay Part B for 4 years without creditable coverage. Your Part B premium is increased by 40% — forever. On the 2026 standard premium of $202.90, that's $283/month for life.
- Penalty is calculated when you eventually do enroll, and is included in your monthly Social Security deduction
Part D Late Enrollment Penalty:
- Triggered when you go 63+ continuous days without creditable prescription drug coverage after first becoming eligible for Medicare
- Penalty: 1% of the "national base beneficiary premium" ($36.78 in 2026) for each month without creditable coverage, rounded to the nearest $0.10
- Example: You go 30 months without Part D after Medicare eligibility. Penalty: 30% × $36.78 = $11.03/month added to your Part D premium for life.
- Penalty is recalculated annually as the base premium changes
What counts as "creditable coverage" to avoid penalties:
- An active employer or union health plan (you or spouse currently working) — Part B safe
- TRICARE for Life or VA prescription benefits — Part D safe
- Federal Employees Health Benefits (FEHB) drug coverage — Part D safe
- An employer drug plan certified as "creditable" (your employer must send you an annual notice) — Part D safe
What does NOT count as creditable:
- COBRA continuation coverage
- Retiree health benefits without active employment
- ACA Marketplace plans
- Short-term health plans
- Indian Health Service
The Special Enrollment Period (SEP) protection:
If you have creditable employer coverage and lose it, you have an 8-month SEP to enroll in Part B and a 63-day SEP to enroll in Part D — both without penalty. Document the loss of coverage in writing (HR letter, COBRA notice).
How to fix a penalty you're already paying:
- For Part B: in some cases, equitable relief is granted if you can show you were misinformed by Medicare or Social Security. File a written request with SSA explaining the circumstances.
- For Part D: there's an appeals process if you can show you DID have creditable coverage during the gap. You'll need the documentation from your former employer.
What to do next: Call (866) 534-1886. If you're approaching 65 or have questions about whether your current coverage is creditable, we'll walk through your specific situation and time your enrollment to avoid penalties. If you're already paying a penalty, we can help you investigate appeals. Free.