There are two main Medicare penalties for late enrollment to be aware of when you are planning your health care in retirement. The first is the Part B late enrollment penalty, and the second is the Part D late enrollment penalty. Let’s look at both penalties and how you can avoid them.

If you need some definitions and background, please read the following articles:

• What are the Parts of Medicare?
• What is covered with Medicare Part A?
• What are the Changes to Medicare Part B?

Part B (and Part A) Late Enrollment Penalties

As you may recall, there are two parts to Original Medicare – Part A and Part B. Most people will get Part A without paying a monthly premium. Part B has a premium you pay for. As a result, the Part B late enrollment penalty is more common. Just to be through, we will cover both.

• Part A – If you have to pay for Part A, and you don’t sign-up for it when you are first eligible, there is a late enrollment penalty: Premium price increase of 10% for “twice the number of years you could have had Part A, but didn’t sign up.” 
• Part B – If you do not sign-up for Part B when you are first eligible, there is an even steeper late enrollment penalty: Standard premium price increase of “10% for each full 12-month period that you could have had Part B, but didn’t sign up for it,” for as long as you have Part B.

When Do These Part A/B Late Enrollment Penalties Apply?

The Medicare Part A and B Late Enrollment Penalties apply to those people who do not have “credible” health care coverage when they age into Medicare at 65. What if you have health care with your employer at 65? Then, you will let the government know you will be delaying your use of Medicare until that coverage ends. In this case, you would not have a penalty.

Part D Late Enrollment Penalty

The Part D Prescription Drug Coverage part of Medicare also comes with a late enrollment penalty. It applies if you do not sign-up when you are first eligible or if you go 63 days or more without coverage at any point. In addition, late penalties are added to your Part D premium for as long as you have Part D.

How much you pay as a penalty can be calculated with a little basic math whipped up by the government:

Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($33.19 in 2019 and $32.74 in 2020) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.

Straight from this page on Medicare.gov

When Does the Part D Late Enrollment Penalty Apply?

If you are eligible for Medicare and do not have Part D coverage or other credible coverage (i.e. from an employer plan) for over 63 days, you will get a penalty. The penalty will not apply to those with credible coverage. This can be from work health plans, VA drug plans, and Part C (MAPD) plans. Of course, from Part D Prescription Drug Plans are credible coverage as well.

Late Enrollment Penalties Summary

In summary, you can avoid the Medicare late fees and penalties with a little bit of planning and research. One great resource for learning more about these penalties is the U.S. Government’s Medicare and You Guidebook. You can read our User’s Guide/Review of this book (and learn how to get a copy if you need one) here.

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