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Medicare Penalties for Late Enrollment
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Important Points
The Medicare Part A penalty for late enrollment is 10% of the base premium for twice the number of years you could have had coverage, but chose not to.
The Medicare Part B penalty is 10% of the base premium for each 12 months you go without creditable coverage. This is a life-long penalty.
The Medicare Part D penalty is 1% of the national base premium for every month you go without creditable coverage. This penalty is also life-long.
We would be willing to bet that you've heard that you should enroll in Medicare as soon as you are eligible for coverage. There's a very good reason for that. Waiting could cost you a lot of money in penalties, some of which you will have to pay for as long as you have Medicare, which can be the rest of your life. (This post has been updated for 2025).
These penalties can add up to thousands of dollars over time. So, in this article we will show you how to avoid Medicare late enrollment penalties for Medicare Part A, Part B, and Part D. (Each part has their own separate penalty),
The majority of people first become eligible for Original Medicare around their 65th birthday. There are exceptions where you can enroll earlier if you have a qualifying disability of suffer from ALS or end-stage renal disease. Your initial enrollment period will begin three months before the month you turn 65. It includes your birthday month and extends for three months after, for a grand total of seven months. This window gives you plenty of time to choose the right plan for you.
There are a few circumstances where you won't have to pay a penalty for delaying your enrollment. However, the majority of the time, you'll pay more if you don't enroll on time.
Let's look at the Medicare late enrollment penalties and how to avoid them.
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Medicare Late Enrollment Penalty for Part A
Most people are eligible for premium-free Medicare Part A and will not need to worry about a penalty. If you or your spouse have a qualifying work history of 10 years (40 quarters) paying into Medicare payroll taxes, then you are eligible for premium-free Part A.
However, if you are not eligible for premium-free Part A, you must sign up during your initial enrollment period and pay for Medicare Part A. If you choose not to, you will face a 10% premium penalty for twice the number of years you could have had coverage but didn't enroll.
Here's and example - If you were eligible for Part A in 2020, but didn't enroll until 2023, you would pay the 10% premium penalty for six years.
This can add up quickly. In 2025, the Medicare Part A premium for people with fewer than 30 quarters of qualifying work history is $505 per month, and $278 per month for people with 30-39 quarters of work history. If you have to pay the maximum penalty for six years, you would lose around $3,600.
Exceptions to the Medicare Part A Penalty
You will not have to pay the penalty if you delayed your Medicare Part A coverage because you had qualifying coverage through your employer or your spouse's employer. If you qualify for a Special Enrollment Period (SEP), you can also avoid the Medicare Part A penalty.
Medicare Late Enrollment Penalty for Part B
The Centers for Medicare and Medicaid Services (CMS) sets the standard Part B premium each year. Most people pay the base rate which is $174.70 in 2025.
If you have a higher income than most, you may be subject to the Income Related Monthly Adjustment Amount (IRMAA). A chart of costs is available on our IRMAA page under the "Medicare" tab.
The initial enrollment period for Medicare Part B is the same seven month window you have for Part A. If you do not sign up for Medicare Part B during your initial enrollment period you may be subject to a 10% Medicare Part B late enrollment penalty. The penalty is imposed for each 12-month period that you delayed enrolling in Part B when you were eligible to enroll. Unfortunately, the penalty is also cumulative for every year that you could have had Part B but didn't enroll.
For example - If you put off enrollment in Medicare Part B for four years, your penalty would mean that you pay a 40% higher Part B premium. You will have to pay this additional amount for as long as you have Medicare coverage. In most cases this means that you will have the penalty for the rest of your life.
Penalties Add Up Quickly
It's not hard to imagine how quickly these penalties could add up to thousands of dollars. The penalty is based on each year's standard Part B premium. Every year that there is a premium increase on Medicare Part B, your late enrollment penalty will also go up since it is tied to the standard premium as a percentage.
Here's an example - If you sign up for Part B this year after delaying your enrollment for three years, your penalty would be at least $40 a month for as long as you are covered by Medicare. Additionally, it will go up every time the standard Part B premium increases.
Occasionally people ask whether a late enrollment penalty will affect their eligibility to enroll in a Medicare Supplement (Medigap) plan. Luckily, the answer is no. You have six months from your Medicare Part B effective date to enroll in a Medigap plan with no health questions asked, regardless of whether or not you have a Part B penalty.
Exceptions to the Medicare Part B Penalty
You are allowed to delay enrollment in Medicare Part B if you have qualifying health insurance from another source, such as a large employer group health plan. In this case, the employer plan is primary and Medicare is secondary. A lot of people will delay Part B until they retire so they don't have to pay for Part B while they are still working and covered under their employer's health plan.
It is important to know that for small employers with less than 20 employees, the rules are different. In this case, Medicare would be the primary insurance, so you will need to enroll in Part A & B during your initial enrollment period.
Medicare Late Enrollment Penalty for Part D
Even though enrollment in Part D coverage for prescription drugs is considered voluntary, you will still incur a Part D late enrollment penalty if you don't enroll in a prescription drug plan during your initial enrollment period.
Just like the Part B penalty, the Part D late enrollment penalty is based on the amount of time you went without coverage and the penalty applies for as long as you are enrolled in a Part D prescription drug plan.
The Part D penalty is 1% for each month you went without prescription drug coverage, rounded to the nearest $0.10. As an example, in 2025, the national base Part D premium is around $34.70. If you went without creditable prescription drug coverage for 26 months, for example, your premium would be about $10 higher due to the penalty. The penalty is added to the monthly premium that you pay for your chosen Part D plan.
Just like Part B, since the penalty is pegged to the national base Part D premium, it will go up each year that the Part D premium increases.
It is so important to enroll in a Part D prescription plan as soon as you are eligible. Even if you don't take any prescription medications currently, enrolling in a drug plan eliminates the possibility of a future penalty that would stick with you forever.
Exception to the Medicare Part D Penalty
If you qualify for the Extra Help program, you will not have to pay a late penalty. This program subsidizes the cost of Part D coverage for low-income individuals and also eliminates any penalty, even if you have gone without creditable coverage for more than 2 months.
IMPORTANT (KEEP IN MIND) - YOU are responsible for later proving that you had creditable coverage from a former employer. You will need to save the letter of creditable coverage that your employer group health plan sends you after you quit your job. This letter should arrive within two weeks of the last day of your coverage.
MAKE SURE YOU SAVE THEM. You must be diligent about saving your evidence of coverage. This is not something that your Medicare agent can help you obtain later on. When you do finally retire and enroll in Part D, you will need to prove to your new Part D carrier and to Medicare that you had creditable prescription drug coverage for all of the months since you turned 65. That proof of coverage is the ONLY WAY to get out of paying a Part D late enrollment penalty.
You can also avoid the penalty for Part D with creditable prescription drug coverage through an employer, union, retirement plan, or other source, such as VA drug coverage.
We Can Help
A lot of people end up paying Medicare late enrollment penalties simply because they just didn't know the rules. Even though you may be healthy at age 65 and feel like you don't need these coverages, the penalties for making a mistake can add up to a large sum of money over time. You can consult with one of our agents by clicking the button below. We will ensure that you enroll in coverage when you are supposed to and minimize the risk of penalties. Our consultations are free and we are always happy to help you.
Key Points
If you have creditable coverage, you can delay these parts of Medicare with no penalty.
Once you lose creditable coverage you have a specific timeframe to get Medicare before being penalized.
The Part A penalty is not life-long, but the Part B and Part D penalties are.
At Mohring Insurance Services LLC, we are happy to offer assistance with Medicare when you choose to enroll. Give us a call at (866) 440-1885, or to schedule a free consultation, click the link below:
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