Medicare's Late Enrollment Penalties

Late Enrollment Penalty

If you aren't eligible for premium-free Part A, and you don't buy it when you're first eligible*, your monthly premium may go up 10 percent.

How much is the penalty?

You'll have to pay the higher premium for twice the number of years you could have had Part A, but didn't sign up.

Example

If you were eligible for Part A for two years but didn’t sign up, you’ll have to pay the higher premium for four years.

*May not be applicable if you are eligible for premium-free Part A or if you meet certain conditions that allow you to sign up for Part A during a special enrollment period.

Medicare’s Part A Late Enrollment Penalty

Late Enrollment Penalty

In most cases, if you don't sign up for Part B when you're first eligible, you'll have to pay a late enrollment penalty. You'll have to pay this penalty for as long as you have Part B.

How much is the penalty?

Your monthly premium for Part B may go up 10 percent for each full 12-month period that you could have had Part B, but didn't sign up for it. Also, you may have to wait until the General Enrollment Period (from Jan. 1 to Mar. 31) to enroll in Part B.

Example

Your Initial Enrollment Period ended Sep. 30, 2020. You waited to sign up for Part B until the General Enrollment Period on Mar. 30, 2023. Your Part B premium penalty is 20 percent.

While you waited a total of 30 months to sign up, this included only two full 12-month periods.

If you didn't qualify for a Special Enrollment Period, you'll have to pay this 20% penalty, in addition to your Part B monthly premium, for as long as you have Part B.

Medicare’s Part B Late Enrollment Penalty

Late Enrollment Penalty

This penalty is added to your monthly Medicare prescription drug plan premium for as long as you have prescription drug coverage. It may also continue to increase or decrease year-over-year as the national base beneficiary premium changes.

How much is the penalty?

One percent (per month) of the national base beneficiary premium ($32.74 for 2023), times the number of full, uncovered months you didn’t have Part D or creditable coverage.

Example

It’s 2023: Jane Smith is currently eligible for Medicare, and her Initial Enrollment Period ended on May 31, 2020. Since Jane was without creditable prescription drug coverage for 31 months from June 2020–December 2022, her penalty in 2023 is 31% (1% for each of the 31 months) of $32.74 (the national base beneficiary premium for 2023). Since the monthly penalty is always rounded to the nearest $0.10, she pays $10.20 each month in addition to her plan’s monthly premium.

This penalty is added for as long as Jane has Medicare drug coverage, even if she switches plans.

Here's the math:

.01 (1% penalty) x 31 months = .31 penalty
.31 × $32.74 (2023 base beneficiary premium) = $10.149
$10.15 rounded to the nearest $0.10 = $10.20
$10.20 = Jane Smith’s monthly late enrollment penalty for 2023

Medicare & You: How the Part D Penalty is Calculated (Video)

Join a Medicare drug plan when you're first eligible.

• You won't have to pay a penalty, even if you've never had prescription drug coverage before.

Don't go 63 days or more in a row without a Medicare drug plan or other creditable drug coverage*.

• Your plan must tell you each year if your drug coverage is creditable coverage. They may send you this information in a letter, or draw your attention to it in a newsletter or other piece of correspondence. Keep this information because you may need it if you join a Medicare drug plan later.

*Creditable prescription drug coverage: Prescription drug coverage (for example, from an employer) that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. People who have this kind of coverage when they become eligible for Medicare can generally keep that coverage without paying a penalty, if they decide to enroll in Medicare prescription drug coverage lager.

Tell your plan about any drug coverage you had if they ask about it.

• When you join a Medicare drug plan, the plan will check to see if you had creditable drug coverage for 63 days or more in a row. If the plan believes you didn't, it will send you a letter with a form asking about any drug coverage you had. Complete the form and return it to your drug plan by the deadline in the letter. If you don't tell the plan about your creditable drug coverage, you may have to pay a penalty.

Join an all-in-one Medicare Advantage plan that includes Parts A, B and D-prescription drug coverage when you’re first eligible and avoid late enrollment penalties.