How Medicare's late enrollment penalties work

The Part B penalty

If you don't sign up for Part B when you're first eligible and don't qualify for a Special Enrollment Period, your Part B premium goes up ten percent for each full twelve-month period you could have had Part B but didn't. It's added to your monthly premium. It isn't a one-time fee: you pay it for as long as you have Part B. You may also pay a higher premium depending on your income.

The Part D penalty and creditable coverage

If you go sixty-three days or more without Medicare drug coverage or other creditable drug coverage after you're first eligible, Medicare adds one percent of the national base beneficiary premium for each month you went without it. Your plan tells you the amount after you join. The penalty stays for as long as you have Medicare drug coverage, even if you switch plans, and because the base premium changes each year, the penalty can too.

Creditable drug coverage is coverage expected to pay, on average, at least as much as Medicare drug coverage. It can come from a current or former employer or union, TRICARE, the VA or the Indian Health Service. Your plan must tell you each year whether its drug coverage is creditable. Hang on to those notices: a Medicare drug plan may later ask whether you had creditable coverage, and without an answer by its deadline you may be charged the penalty.

The Part A penalty, for people who buy Part A

Most people don't pay a premium for Part A, because they or a spouse paid Medicare taxes long enough while working, generally at least ten years. If you have to buy Part A and don't buy it when you're first eligible, your monthly premium may go up ten percent, and you pay the higher premium for twice the number of years you didn't sign up.

When you won't owe a penalty

• Part B, while a current job covers you

  If you or your spouse are still working and covered by that employer, you can sign up for Part B during a Special Enrollment Period without a penalty: any time you are covered, or within eight months after the work or the coverage ends.

• Part D, with creditable drug coverage

  If you keep creditable drug coverage, such as the state drug coverage of State Group Insurance retirees, you won't owe a Part D penalty. If job or union drug coverage ends, joining a Medicare drug plan within sixty-three days avoids it.

• Extra Help and Medicare Savings Programs

  You don't pay the Part D penalty while you get Extra Help, and you generally won't pay the Part B penalty if you enroll in a Medicare Savings Program.

State Group Insurance retirees

For State of Florida retirees who keep a State Group Insurance health plan, Medicare pays first once you are eligible and the state plan pays second, even if you never enroll in Medicare. The state advises enrolling in Parts A and B as soon as you are eligible and no longer working for the state.

Retiree coverage isn't coverage from a current job, and when retiree or COBRA coverage ends, that doesn't open a Special Enrollment Period for Part A and Part B.

If you're a Florida Retirement System member, the page for FRS retirees puts the steps in order.

Questions people ask

You'll find the rest of my guides on the Learn page.