The Medicare Late-Enrollment Penalties That Last a Lifetime, and How to Avoid Them

Most insurance late fees are a one-time annoyance. Medicare’s late-enrollment penalties are different: they’re added to your premium every month, and for most people they last as long as they have that coverage. The good news is that they’re usually avoidable once you know the rules.

How Medicare penalties work

According to Medicare.gov, late-enrollment penalties:

• Are added to your monthly premium. They’re not a one-time fee.
• Are usually charged for as long as you have that type of coverage. For most people, that means for life.
• Grow the longer you wait, because they’re based on how long you went without coverage similar to Medicare.

The Part B penalty

If you don’t sign up for Part B when you’re first eligible, and you don’t qualify for a Special Enrollment Period, you may pay an extra 10% for each full 12-month period you could have had Part B but didn’t.

Medicare’s own example (2026): someone who waited 24 months would owe a 20% penalty. With the 2026 standard Part B premium of $202.90, that works out to about $243.50 a month. CMS will announce the 2027 Part B premium later this year. Because the penalty is a percentage of each year’s premium, it goes up when the premium goes up. (Figures from Medicare.gov for 2026; amounts change each year.)

Your first chance to sign up is your Initial Enrollment Period, a 7-month window that starts 3 months before the month you turn 65 and ends 3 months after it. If you miss it and don’t qualify for a Special Enrollment Period, you generally have to wait for the General Enrollment Period (January 1 to March 31), which can leave a gap in coverage.

The Part D (drug coverage) penalty

You may owe a Part D penalty if, after your Initial Enrollment Period, you go 63 days or more in a row without Medicare drug coverage or other creditable drug coverage (coverage expected to pay, on average, at least as much as standard Medicare drug coverage).

• The penalty is 1% of the “national base beneficiary premium” for each full month you went without coverage. That base amount is $38.99 in 2026, per Medicare.gov, and $41.33 in 2027, per CMS. It can change every year.
• Medicare’s example: 14 months without creditable coverage means a 14% penalty, added to your plan’s premium for as long as you have Medicare drug coverage, even if you switch plans. Using the 2027 base amount, a 14% penalty is about $5.79 a month (14% × $41.33), which Medicare rounds to the nearest 10 cents.
• People who qualify for Extra Help don’t pay the Part D penalty.

A common belief is “I don’t take any prescriptions, so I don’t need Part D yet.” Medicare.gov addresses this directly, suggesting that people who take few drugs consider a drug plan with a low monthly premium to avoid the penalty. Your situation may be different, but know that the penalty can apply even if you’ve never filled a prescription.

Part A, briefly

Most people get Part A without a premium, so there’s no Part A penalty for them. If you have to buy Part A and don’t sign up when first eligible, your Part A premium may go up 10%, and you’d pay that higher amount for twice the number of years you didn’t sign up.

What lets you wait without a penalty, and what doesn’t

Type of coverage	Lets you delay Part B without a penalty?
Group health plan based on current employment (yours or your spouse’s)	Generally yes, through a Special Enrollment Period
COBRA	No
Retiree health coverage	No
VA health coverage	No
Individual coverage, including the Health Insurance Marketplace	No

Source: Social Security Administration. Drug coverage follows a separate rule: what matters for Part D is whether your drug coverage is creditable. Employer and union plans must tell you each year whether it is, and CMS requires them to send this notice before October 15 each year. Keep these notices. You may need them later. (Don’t send them to Medicare.)

If you or your spouse are still working, ask the employer’s benefits office whether you need to sign up for Part A and Part B at 65. Medicare.gov cautions that if you don’t, your job-based insurance might not cover your costs in some situations.

The 8-month Special Enrollment Period after work ends

If you’ve had group health coverage based on current employment since you became eligible, you generally get an 8-month Special Enrollment Period to sign up for Part B without a penalty. It starts the month after your employment ends or your group coverage ends, whichever happens first.

• COBRA doesn’t pause the clock. The 8 months start when you stop working (or lose the job-based coverage), even if you choose COBRA. Medicare.gov says not to wait until COBRA ends to sign up for Part B.
• Avoid a gap. Medicare.gov suggests checking when your employer coverage ends and signing up about a month earlier.
• Drug coverage has a shorter window. After employer or union coverage ends (including COBRA), you generally have 2 full months after the month it ends to join a Medicare drug plan or a Medicare Advantage plan with drug coverage.
• The exception: if your employment or group coverage ends during your Initial Enrollment Period, use that period instead.

Form CMS-L564: the proof that protects you

When you sign up for Part B during a Special Enrollment Period, Social Security needs proof of your employer coverage. That’s what Form CMS-L564, “Request for Employment Information,” is for:

• You fill out Section A, then ask your employer to complete and sign Section B (coverage and employment dates).
• You send it with the Part B application (Form CMS-40B) to Social Security, or apply online at SSA.gov.
• Tip: ask HR for it before your last day, while the people who can sign it are easy to reach.

Retiree coverage and COBRA: common pitfalls

• Assuming retiree coverage lets you wait. It doesn’t count as coverage from current employment for Part B. Medicare.gov also notes that retiree coverage may not pay if you don’t have both Part A and Part B.
• Riding COBRA past the 8 months. If you miss the window, you may face a gap in coverage and a lifetime Part B penalty.
• Joining a plan without checking with the former employer. Medicare advises asking whether you or your family could lose retiree coverage if you join a plan the employer doesn’t offer.
• Health Savings Accounts. Medicare.gov says that if you have an HSA, you and your employer should stop contributions 6 months before you retire or apply for Social Security benefits, because Part A coverage can start up to 6 months back. Ask a tax professional how this applies to you.

If you think a penalty is wrong

Mistakes happen. If you had qualifying coverage, keep your proof (the CMS-L564, creditable coverage notices, and dates). For a Part D penalty, the plan’s notice explains how to ask Medicare to reconsider. For Part B questions, contact Social Security at 1-800-772-1213.

A simple checklist before you retire or turn 65

• Write down your Initial Enrollment Period dates.
• Ask your employer: Is my coverage based on current employment? Do I need Part A and Part B at 65?
• Find your most recent creditable coverage notice for drug coverage.
• Before your last day, get Form CMS-L564 completed.
• Put your 8-month deadline (and the shorter drug-coverage deadline) on the calendar.

If you live in Texas or one of the other states where I’m licensed, and you’d like to talk through how Medicare decisions fit with the rest of your retirement and family planning, I’m happy to answer questions plainly, with no pressure. You’re welcome to book a conversation This is a solicitation for insurance. or call me at 346-258-7080. For free, unbiased one-on-one Medicare counseling, you can also call the Texas Health Information, Counseling and Advocacy Program (HICAP) at 800-252-9240.

Chris Gavrel, independent licensed insurance agent

This article is for general educational purposes only and is not legal, tax, or financial advice. Medicare rules, enrollment periods, and dollar amounts change, and some rules vary by state. Confirm current details with Medicare.gov, Social Security, or your state’s insurance department before making a decision.

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