Medicare Late Enrollment Penalty Guide

What Is a Medicare Late Enrollment Penalty?

Medicare expects you to sign up during your Initial Enrollment Period, the 7 months that start 3 months before the month you turn 65 and end 3 months after it, unless you have other coverage that counts. If you do not, Medicare.gov says you "may have to pay an extra amount, called a late enrollment penalty." The penalty is added to your monthly premium, it is not a one-time late fee, and for Part B and Part D it is usually charged for as long as you have that coverage.

There are three separate penalties, one for each part of Medicare you can be late for, and each works differently:

• Part B (medical insurance): 10% for each full 12-month period, set by Social Security Act section 1839(b) and administered by SSA.
• Part D (prescription drugs): 1% per uncovered month, set by 42 CFR 423.286 and applied by your drug plan.
• Part A (hospital insurance): only for people who do not qualify for premium-free Part A and have to buy it.

Because the Part B and Part D penalties are percentages of a premium that is reset every year, the dollar amount usually grows over time even though the percentage is fixed.

How Is the Part B Penalty Calculated?

The statute increases the standard monthly premium "by 10 percent of the monthly premium so determined for each full 12 months" in which you could have been enrolled but were not. Three details decide the number:

• Only full 12-month periods count. Divide the countable months by 12 and drop the remainder. 23 months is one period (10%); 24 months is two (20%).
• The base is the standard premium. The increase is figured "without regard to" the income-related adjustment, so IRMAA is charged on top and is not multiplied by the penalty. The 2026 standard premium is $202.90.
• The increased premium is rounded to the nearest dime. SSA's POMS HI 01001.010 rounds any premium that is not an exact multiple of 10 cents to the nearest dime, with 5 to 9 cents rounding up.

The 2027 standard premium had not been published by CMS as of October 25, 2026. When it is, the same percentages apply to the new figure.

Which Months Count Toward the Part B Penalty?

For a first enrollment on or after January 1, 2023, SSA counts the months from the end of your Initial Enrollment Period through the end of the month you enroll (42 CFR 408.24(b); POMS HI 01001.010). Before 2023 the count ran to the end of the enrollment period you used, which is why older penalties can look one or two months longer.

Several kinds of months are left out:

• Months with group health coverage from current employment, yours or your spouse's, after 65 (and, for people under 65 on disability, coverage through a large group health plan based on a family member's current employment).
• Months before 65. They are never counted toward a penalty after 65, and a surcharge charged while you were under 65 on disability is rolled back to the standard premium in the month you turn 65.
• Months covered by an Exceptional Conditions Special Enrollment Period, if you enroll within it.
• Months in your Initial Enrollment Period, which never count.

If you dropped Part B and later re-enrolled, SSA adds the surcharge months from your first enrollment to the months between the end of the old coverage and your new enrollment.

If you miss every window, the General Enrollment Period runs from January 1 to March 31 each year, and coverage starts the month after you sign up.

Does Employer Coverage Protect You From the Penalty?

Yes, if it is the right kind. Group health coverage based on your or your spouse's current employment lets you delay Part B without a penalty. When the job or the coverage ends, you get a Special Enrollment Period that, per Medicare.gov, ends "8 months after the group health plan coverage or the employment ends, whichever happens first." You also send SSA an employer-completed form showing the job-based coverage you had.

Two kinds of coverage look similar but do not count:

• COBRA. Medicare.gov is explicit: "Your 8-month Special Enrollment Period to sign up for Part B starts when you stop working, even if you choose COBRA or other coverage that's not Medicare." Riding out 18 months of COBRA before signing up can put you past the window.
• Retiree coverage. It is not based on current employment, so months on a retiree plan count toward the penalty.

Marketplace coverage does not protect you either. If you are near 65 and covered only by a marketplace or individual plan, the safe course is to sign up for Part B during your Initial Enrollment Period. If you contribute to an HSA through work, note that enrolling in Medicare ends your eligibility to contribute; see the HSA Tax Benefits Guide.

How Is the Part D Penalty Calculated?

Medicare's fact sheet gives the formula as:

1% x national base beneficiary premium x number of full months without Part D or creditable coverage, with the monthly penalty rounded to the nearest $0.10 and added to your plan premium.

The penalty applies only if, after your Initial Enrollment Period, you went 63 days or more in a row without a Medicare drug plan or other creditable drug coverage (42 CFR 423.46). The base beneficiary premium is a national figure set by CMS each year, not your plan's premium: $38.99 for 2026 and $41.33 for 2027, announced July 28, 2026. The Inflation Reduction Act caps its annual increase at 6% from 2024 through 2029.

You pay the penalty for as long as you have Medicare drug coverage, even if you switch plans or choose a plan with a $0 premium. Your plan tells you whether you owe it and what your premium will be after you join.

What Counts as Creditable Drug Coverage?

Creditable prescription drug coverage is coverage that is expected to pay, on average, at least as much as Medicare's standard drug coverage. Medicare lists examples such as drug coverage from a current or former employer or union, TRICARE, the Indian Health Service, a Tribe or Tribal organization, an Urban Indian program, and other health plans.

The plan must tell you in writing whether its coverage is creditable. Keep those notices. When you join a Medicare drug plan, the plan checks Medicare's systems for a possible break of 63 days or more, and if it finds one, it sends you a form asking about prior coverage. Returning that form by its deadline, with the creditable coverage notice, is your chance to prevent a penalty you do not owe.

Is There a Part A Penalty?

Only for people who have to buy Part A. Most people get premium-free Part A because they or a spouse paid Medicare taxes long enough, generally at least 10 years. Those who do not qualify pay $311 or $565 a month in 2026, depending on how long they or their spouse worked.

If you have to buy Part A and do not sign up when first eligible, Medicare.gov says your monthly premium "may go up 10%" and you pay the higher premium "for twice the number of years you didn't sign up." Unlike Part B, the Part A percentage does not grow with each year late, and it ends. Three years late at $565 is $56.50 a month for six years, or $4,068 in total at 2026 amounts.

Can a Penalty Be Removed or Reduced?

• Extra Help (Part D). If you qualify for Extra Help, you are not charged a Part D penalty while you have it, and uncovered months before you qualified are not counted.
• Medicare Savings Programs (Part B). Medicare.gov says you generally will not pay a Part B penalty if you enroll in a Medicare Savings Program, where your state helps pay Part B premiums.
• Part D reconsideration. If you disagree, return the reconsideration form within 60 days of the penalty letter, with proof such as a creditable coverage notice. A Medicare contractor, not your plan, decides, generally within 90 days. You must keep paying the penalty while you wait, and a plan can disenroll you for not paying it.
• Exceptional Conditions Special Enrollment Periods (Part B). Enrolling under one, for example after a disaster or incorrect information from an employer or health plan, means no penalty for the months it covers.
• Turning 65 after a disability penalty. A Part B surcharge charged while you were under 65 is rolled back to the standard premium the month you turn 65.

Are Medicare Premiums and Penalties Tax-Deductible?

The penalty is part of the premium, and IRS Publication 502 treats Medicare premiums as medical expenses: "Premiums you pay for Medicare Part B are a medical expense," Part D premiums can be included, and Part A premiums count if you enroll voluntarily because you are not covered by Social Security. How much that helps depends on your situation:

• Itemizers. Medical expenses are deductible on Schedule A only to the extent they exceed 7.5% of your adjusted gross income. Use the Medical Expense Deduction Calculator and the Medical Expense Deduction Guide to see whether you clear the floor.
• Self-employed. The Form 7206 instructions say Medicare premiums you voluntarily pay for insurance similar to qualifying private health insurance can be used to figure the self-employed health insurance deduction.
• HSA owners 65 or older. Publication 969 allows tax-free HSA distributions for Medicare premiums if you are 65 or older, but not for a Medicare supplement (Medigap) policy.

Your Medicare premiums can also be affected by your income: higher earners pay an income-related monthly adjustment amount (IRMAA) on Part B and Part D, which is separate from any late enrollment penalty. See the IRMAA Medicare Surcharge Guide.

Practitioner Insight (LMN Tax Inc.)

Real-World Scenarios

When the Rules Differ

• Enrollments before 2023. For first enrollments or re-enrollments before January 1, 2023, SSA counted months to the end of the enrollment period used, not the month of enrollment, under 42 CFR 408.24(a) and (c).
• Disability and ESRD. People under 65 follow separate counting rules for each period of entitlement, and large group health plan coverage from a family member's current employment can protect them.
• State buy-in. If a state pays your Part B premium under a buy-in agreement, it never pays a late enrollment surcharge, and leaving the buy-in rolls is treated as if you had enrolled on time.
• Medicare Advantage. The Part B penalty still applies if you join a Medicare Advantage plan, because you must keep Part B, and the Part D penalty applies to a Medicare Advantage plan with drug coverage.
• Premiums not yet published. The 2027 Part A and Part B premiums were not published as of October 25, 2026. The percentages above apply to whatever CMS announces.

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