Medicare enrollment penalties
Many new Medicare beneficiaries worry about penalties, and with good reason. Several Medicare enrollment mistakes carry lifetime penalties or long-lasting costs, so understanding the rules can prevent expensive surprises.
Part B late enrollment penalty
When to enroll. If you are not receiving Social Security at age 65, you must sign up for Part B during your Initial Enrollment Period (IEP): the 3 months before your 65th birthday, the month you turn 65, and the 3 months after.
What happens if you miss it? Missing the IEP without qualifying for a Special Enrollment Period (SEP) triggers a late enrollment penalty equal to 10% of the Part B premium for each full 12-month period you went without Part B. You’ll also be limited to the General Enrollment Period (Jan 1-Mar 31) to sign up, with coverage starting the first day of the month after you enroll.
Creditable employer coverage. If you (or your spouse) have employer coverage through active work, that coverage is often considered creditable and lets you delay Part B without penalty; the SEP then applies when you leave that coverage. COBRA, however, is generally not treated as creditable for Part B.
A senior whose employer has fewer than 20 employees must still enroll in Medicare at 65 because the group plan becomes secondary to Medicare.
Part D late enrollment penalty
How it works. The Part D penalty applies if you go without creditable prescription drug coverage for 63 or more consecutive days after your IEP. The penalty is added to your monthly Part D premium and is recalculated each year.
How it’s calculated. Medicare multiplies 1% of the national base beneficiary premium by the number of full, uncovered months you went without creditable drug coverage; that percentage is added to your monthly premium and typically remains for as long as you have Part D.
Common pitfalls and practical tips
- Don’t assume all coverage counts. Employer plans, retiree plans, and VA coverage can be creditable, but you should get written confirmation from the plan. COBRA usually does not count for Part B.
- If you’re still working at 65, document your coverage. Keep proof that your employer plan is creditable so you can avoid penalties later.
- Act within the enrollment windows. Missing the IEP often means waiting for the General Enrollment Period and paying penalties that can last for years.
Need help?
Every senior’s situation is unique. Our service is free and we can review your specific enrollment timeline and coverage to help you avoid penalties.
Call 800-750-2407 to schedule a review with one of our licensed agents.
God bless!
