Medicare late enrollment penalty: how it works and how to avoid it

Key points

• Part B: your premium goes up 10% for each full 12 months you could have had Part B but did not. You pay it for as long as you have Part B.
• Part D: 1% of the national base beneficiary premium ($41.33 in 2027) for each full month you went without Part D or other creditable drug coverage, after a gap of 63 days or more. It also lasts as long as you have Part D.
• Part A: applies only to people who have to buy Part A. The premium may go up 10%, for twice the number of years you were late.
• Coverage from a job you or your spouse still hold usually protects you from the Part B penalty. COBRA and retiree coverage do not.

A late enrollment penalty is not a one-time fee. It is added to your monthly premium, usually for as long as you have that part of Medicare, and it grows the longer you wait. This guide explains how each one is counted, with worked examples. It is part of our Medicare guide.

The three penalties at a glance

	Part B	Part D	Part A (only if you buy it)
What triggers it	Not signing up when first eligible, with no Special Enrollment Period	63 days or more in a row without Part D or creditable drug coverage after your Initial Enrollment Period	Not buying Part A when first eligible
How much	10% of the standard premium for each full 12 months	1% of the national base beneficiary premium for each full month	10% of the Part A premium
How long	As long as you have Part B	As long as you have Part D	Twice the number of years you were late

How the Part B penalty is calculated

If you sign up on or after January 1, 2023, count the months from the end of your Initial Enrollment Period through the end of the month you sign up. Divide by 12 and drop the remainder: only full 12-month periods count. Each one adds 10%.

• Months inside your Initial Enrollment Period never count.
• Months when you were 65 or older and covered by an employer group health plan through your own or your spouse’s current work are left out.
• Months before 65 never count toward a penalty after 65. A penalty from disability Medicare before 65 is dropped at 65.

The percentage stays fixed, but it applies to each year’s premium, so the dollar amount rises when the premium does. The monthly premium, penalty included, is rounded to the nearest $0.10.

Medicare’s handbook gives an example: an Initial Enrollment Period that ended in December 2021 and Part B taken in March 2024. That is 27 months without Part B, but only 2 full 12-month periods, so the penalty is 20%. Medicare.gov’s 2026 example prices a 20% penalty: $40.58 on top of the $202.90 standard premium, $243.48 in total, billed as $243.50. Our script reproduces both.

Worked example (hypothetical). Someone’s Initial Enrollment Period ended on September 30, 2023. They had no employer coverage and sign up in the General Enrollment Period in March 2027.

• October 2023 through March 2027 is 42 months: 3 full 12-month periods, so a 30% penalty.
• At the 2026 standard premium, $202.90 x 1.30 = $263.77, billed as $263.80. That is $60.90 a month, or $730.80 a year, more than the standard premium, for as long as they have Part B.
• Had they signed up a year earlier, in March 2026, it would have been 30 months, a 20% penalty, and a 2026 bill of $243.50.

CMS had not published the 2027 Part B premium, deductible or income brackets when we checked on November 4, 2026. Whatever the 2027 standard premium is, this person pays 30% more than it. Higher earners pay an income-related surcharge on top; our guide to the Part B premium covers both.

Part B sign-up after the Initial Enrollment Period is limited to the General Enrollment Period, January 1 to March 31 each year, with coverage starting the month after you sign up, unless you qualify for a Special Enrollment Period. So a missed window can mean months without coverage as well as a penalty.

When you do not owe a Part B penalty

You generally do not owe a Part B penalty if you qualify for a Special Enrollment Period, or if you enroll in a Medicare Savings Program.

Working past 65. If you or your spouse have group health plan coverage from current employment, you can sign up any time while you are covered, or in the 8 months that begin the month after the job or the coverage ends, whichever is first. Those months do not count toward a penalty. Our guide on Medicare when you have employer insurance covers this in detail.

Coverage that does not protect you: COBRA, retiree coverage, VA coverage, individual coverage such as a Marketplace plan, and former-employer coverage through severance or a layoff. The 8 months run from the end of the job-based coverage whether or not you take COBRA, and COBRA ending does not open a new window. This is the most common way people end up with a penalty they did not expect; see our guide to COBRA and Medicare.

Wrong information from an employer or plan. If an employer, a group health plan, or a plan’s broker or agent gave you wrong information that made you miss Part B, Social Security has an exceptional-conditions Special Enrollment Period. It starts the day you contact Social Security and ends on the last day of the month six months later. Months covered by an exceptional-conditions Special Enrollment Period do not count toward the penalty if you enroll within it. Other exceptional situations include a natural disaster or emergency, losing Medicaid, and incarceration.

How the Part D penalty is calculated

The penalty applies if, after your Initial Enrollment Period, you go 63 days or more in a row without Part D or other creditable drug coverage. Creditable coverage is drug coverage expected to pay, on average, at least as much as standard Part D, for example from a current or former employer or union, TRICARE, the VA or the Indian Health Service. Your plan has to tell you each year whether its coverage is creditable.

The formula is 1% x the national base beneficiary premium x the number of full months without Part D or creditable coverage, rounded to the nearest $0.10. The base premium is $38.99 for 2026 and $41.33 for 2027. The penalty is recalculated each year with that year’s base premium, so it can go up or down. It stays even if you switch plans or join a plan with a $0 premium.

Worked example (hypothetical). Someone went 40 full months without Part D or creditable coverage, and their drug plan starts on January 1, 2027.

• 40 x 1% x $41.33 = $16.53, paid as $16.50 a month on top of the plan’s premium.
• That is $198.00 over 2027, and the penalty is recalculated each year after that.

We checked the method against Medicare’s two published examples. In the 2027 handbook, 29 uncovered months at the 2025 base premium of $36.78 is $10.67, paid as $10.70. In Medicare’s Part D penalty fact sheet, 17 uncovered months at the 2026 base premium is $6.63, paid as $6.60. Our script reproduces both.

Extra Help. People who get Extra Help do not pay the Part D penalty. Medicare also does not count uncovered months before you qualified for Extra Help, and in its own example months without a plan while the person still had Extra Help did not count either. If you later lose Extra Help and go 63 days or more without coverage, a penalty can apply.

COBRA with drug coverage. If your COBRA includes creditable drug coverage, you get a Special Enrollment Period to join a Medicare drug plan without a penalty when COBRA ends. Our guide to what Medicare Part D costs covers the rest of the drug bill.

How to challenge a Part D penalty

When you join a drug plan, it checks Medicare’s records for a break of 63 days or more and may send you a form asking about earlier drug coverage. Returning it by the deadline is your chance to show creditable coverage the plan did not know about.

If you are told you owe a penalty and you disagree:

1. Ask for a reconsideration within 60 days of the date on the letter, using the form that came with it. If you are late, you have to explain why.
2. Include proof, such as a notice of creditable drug coverage from an employer or union plan, or a copy of your prescription drug card.
3. Keep paying. By law the penalty is part of the premium, so you pay it while the review runs, and a plan can disenroll members who do not pay their premiums, penalty included.

A Medicare contractor that is not connected to the plan decides, generally within 90 days. If it finds the penalty wrong, the plan removes or adjusts it and explains whether you get a refund. Joining a different plan generally does not give you a new reason to ask.

The Part A penalty

Most people do not pay a Part A premium, because they or a spouse paid Medicare taxes long enough, usually 10 years of work. For them there is no Part A penalty. Premium-free Part A can be taken any time after you first become eligible, and it starts up to 6 months back from when you sign up.

If you have to buy Part A and do not buy it when first eligible, your monthly premium may go up 10%, for twice the number of years you could have had it. Two years late means four years at the higher premium.

Illustration (hypothetical). Part A costs $311 or $565 a month in 2026 for people who buy it, depending on work history. With the full 10% added, someone paying $565 who signed up 2 years late would pay $621.50 a month for 4 years; at $311 it would be $342.10. The 2027 Part A premiums had not been published when we checked.

How to avoid a Medicare late enrollment penalty

• At 65, check where your coverage comes from. Coverage from a job you or your spouse still hold usually lets you wait on Part B. COBRA, retiree, VA and Marketplace coverage do not. Our guide on when to apply for Medicare has the dates.
• When the job or its coverage ends, sign up within 8 months, even if you take COBRA.
• Keep the yearly creditable-coverage notice from any drug plan that is not Part D. It is your proof if a Part D plan later says you had a gap.
• Do not let drug coverage lapse for 63 days or more, including when you drop a plan in Open Enrollment.
• If an employer or plan misled you, contact Social Security and ask about the exceptional-conditions Special Enrollment Period.

Where to get free help

State Health Insurance Assistance Programs (SHIPs) give free, personalized Medicare counseling and are not connected to any insurance company or plan. Find yours at shiphelp.org or through 1-800-MEDICARE (1-800-633-4227, TTY 1-877-486-2048), which is open 24 hours a day, 7 days a week.

About this guide

Written by the Diversify Guy editorial desk. Diversify Guy is a pen name. It is the byline of our editorial team, not a single individual. We do not publish personal trading records or claim to be your adviser. We tell you where every figure came from so you can check it yourself. How we work and how we get paid.

This guide explains federal Medicare rules; some states add their own rules for Medigap and other coverage. It is not personalized insurance, tax, legal or financial advice. Diversify Guy earns affiliate commissions and advertising fees from companies featured elsewhere on the site. This page carries no ads and no affiliate links.

Sources and check dates

All sources checked on November 4, 2026.

• Medicare.gov, avoid late enrollment penalties (Part A, Part B and Part D rules, the 2026 Part B example, reconsideration): https://www.medicare.gov/basics/costs/medicare-costs/avoid-penalties
• Medicare & You 2027, the official handbook (Part B penalty and the Mr. Smith example, Part D penalty and the Mrs. Martinez example, creditable coverage, COBRA): https://www.medicare.gov/publications/10050-medicare-and-you.pdf
• Medicare.gov, The Part D Late Enrollment Penalty (fact sheet 11222, July 2026): https://www.medicare.gov/publications/11222-part-d-late-enrollment-penalty.pdf
• Medicare.gov, when Medicare coverage starts: https://www.medicare.gov/basics/get-started-with-medicare/sign-up/when-does-medicare-coverage-start
• Medicare.gov, working past 65: https://www.medicare.gov/basics/get-started-with-medicare/medicare-basics/working-past-65
• Medicare.gov, how Medicare works with other insurance (publication 02179, SHIP contact): https://www.medicare.gov/publications/02179-how-medicare-works-with-other-insurance.pdf
• Social Security, when to sign up for Medicare and sign up for Part B only (the 8-month window, Form CMS-10797): https://www.ssa.gov/medicare/plan/when-to-sign-up and https://www.ssa.gov/medicare/sign-up/part-b-only
• CMS, press release on the 2027 plan year (1-800-MEDICARE hours): https://www.cms.gov/newsroom/press-releases/medicare-advantage-medicare-prescription-drug-programs-expected-remain-stable-2027
• Social Security POMS HI 01001.010, premium increase for late enrollment: https://secure.ssa.gov/poms.nsf/lnx/0601001010
• Social Security POMS HI 00805.384, Special Enrollment Period for employer or group health plan misrepresentation: https://secure.ssa.gov/poms.nsf/lnx/0600805384
• CMS, 2026 Medicare Parts A and B premiums and deductibles fact sheet: https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles
• CMS address for the 2027 Part B fact sheet, which returned “Page Not Found” on November 4, 2026: https://www.cms.gov/newsroom/fact-sheets/2027-medicare-parts-b-premiums-deductibles
• CMS, Part D 2027 base beneficiary premium: https://www.cms.gov/newsroom/fact-sheets/medicare-part-d-2027-national-average-monthly-bid-amount-information
• CMS, 2026 Part D base beneficiary premium: https://www.cms.gov/newsroom/fact-sheets/2026-medicare-part-d-bid-information-and-part-d-premium-stabilization-demonstration-parameters
• 42 CFR 408.22 and 408.24 (Part B premium increase and the months counted): https://www.ecfr.gov/current/title-42/section-408.22 and https://www.ecfr.gov/current/title-42/section-408.24
• 42 CFR 406.24, 407.14, 407.15, 407.20 and 407.25 (enrollment periods, the Special Enrollment Period and coverage start): https://www.ecfr.gov/current/title-42/section-406.24, https://www.ecfr.gov/current/title-42/section-407.14, https://www.ecfr.gov/current/title-42/section-407.15, https://www.ecfr.gov/current/title-42/section-407.20 and https://www.ecfr.gov/current/title-42/section-407.25
• 42 CFR 423.46, 423.56 and 423.286 (Part D penalty, creditable coverage, penalty amount): https://www.ecfr.gov/current/title-42/section-423.46, https://www.ecfr.gov/current/title-42/section-423.56 and https://www.ecfr.gov/current/title-42/section-423.286