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What is the Medicare late enrollment penalty and how do I avoid it?

Two separate penalties, both permanent, both easy to avoid if you know the deadline. Here is how each one is calculated.

Updated August 17, 2026 · 3 min read

There are two late enrollment penalties, one for Part B and one for Part D. They work differently, they are calculated differently, and both of them last as long as you have the coverage. Not a year. Permanently.

The Part B penalty

For every full 12 months you could have had Part B and did not, 10 percent gets added to your Part B premium. That surcharge stays on for the rest of your life.

Three years late is 30 percent more, every month, forever. The penalty is applied to the standard premium for the current year, so it grows as the premium grows.

There is a second cost people forget. If you miss your window, you may not be able to enroll immediately at all, and coverage can start months later. You are uninsured in the meantime.

The Part D penalty

This one is calculated per month rather than per year. It is 1 percent of a national base premium figure for each full month you went without creditable drug coverage after you were eligible.

Two years without coverage is roughly a 24 percent surcharge added to whatever drug plan you eventually choose. It follows you from plan to plan and it is recalculated each year against the national base figure.

What creditable coverage means

You are not penalized for time you had coverage at least as good as Medicare's. That is what creditable means.

Employer plans have to tell you every year whether their drug coverage is creditable. It usually arrives as a one page notice in the fall that looks like junk mail.

• Keep those notices. They are your proof.
• VA drug coverage is creditable.
• TRICARE is creditable.
• Marketplace and COBRA coverage do not protect you from the Part B penalty.

The windows that keep you clear

• Initial Enrollment Period: seven months around your 65th birthday. Three months before, your birthday month, three months after.
• Special Enrollment Period: eight months after employer coverage from active work ends, for Part B. Part D has a shorter window of two months, which is why people clear the Part B deadline and still get hit on Part D.
• General Enrollment Period: January through March, for people who missed everything else. This is the cleanup option, and by then the penalty has already attached.

See the rules for working past 65 for which of these applies to you.

If the penalty was applied by mistake

It happens, usually because Social Security has no record of coverage you actually had. You can appeal, and the creditable coverage notices you kept are exactly what wins it.

There is also relief available if you delayed because someone gave you bad information, though that is a narrower path and it is not automatic.

The practical version

1. Mark the three months before your 65th birthday month on a calendar now.
2. If you are working past 65, confirm in writing that your employer has 20 or more employees and that its drug coverage is creditable.
3. Keep every creditable coverage notice in one folder.
4. When employer coverage ends, act in the first month, not the eighth. The Part D window is only two months.

None of this is complicated once you see it laid out, but the deadlines are unforgiving and nobody sends you a reminder. If you are not certain which window you are in, call us before it closes.