Part B Late Enrollment Penalties
If you didn’t get Part B when you’re first eligible, your monthly premium may go up 10% for each 12-month period you could’ve had Part B, but didn’t sign up. In most cases, you’ll have to pay this penalty each time you pay your premiums, for as long as you have Part B. And, the penalty increases the longer you go without Part B coverage.
Usually, you don’t pay a late enrollment penalty if you meet certain conditions that allow you to sign up for Part B during a Special Enrollment Period.
How much is the Part B Late Enrollment Penalty?
The penalty amount could go up 10% for every 12-month period when you were eligible for Part B but didn’t enroll. For example, if you waited for three years to sign up, your penalty could be 30% of the premium. In this example, you might pay your Part B monthly premium, plus 30%, for as long as you have Part B.
Exceptions to the Late Enrollment Penalty
Some beneficiaries qualify for Special Enrollment Periods (SEPs), in certain situations. If you qualify for an SEP, you can enroll in Medicare Part A or Part B during your SEP without having to pay a late-enrollment penalty. For example, if you’re covered by a group health plan because you or your spouse (or a family member if you’re disabled) is working, your SEP for Medicare Part A or Part B is either of the following:
- Anytime you’re still covered by the group plan.
- During the eight months starting the month after employment ends or the group plan coverage ends, whichever happens first. For example, if your employment ends on March 15 and your group coverage continues until March 30, you have until November 15 to enroll in Medicare Part A and Part B.
If you qualify for an SEP, usually the late-enrollment penalty won’t apply to you.
Medicare Prescription Drug Late Enrollment Penalty (Part D)
If you don’t enroll in a Medicare Prescription Drug Plan (Medicare Part D or a Medicare Advantage plan that includes prescription drug coverage, called a Medicare Advantage Prescription Drug plan) during the Initial Enrollment Period (IEP) for Part D, you may have to pay a late-enrollment penalty if you enroll in a Part D plan later. You won’t have to pay this penalty if you:
- Enroll in the prescription drug plan when you’re first eligible to do so, during the IEP for Part D.
- Make sure you have creditable coverage with your insurance plan. Your plan must tell you every year if your prescription drug coverage is creditable coverage. If you have a period of 63 or more days in a row without creditable coverage, you could pay a late-enrollment penalty.
- Qualify for Medicare Extra Help.
- Never enroll in a Medicare Prescription Drug Plan or a Medicare Advantage Prescription Drug plan.
The late-enrollment penalty for Medicare Prescription Drug Plans depends on how long you go without creditable coverage. The late-enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” by the number of months you were eligible, but did not apply, for a Medicare Prescription Drug Plan. This amount is rounded to the nearest 10 cents and added to your monthly prescription drug plan premium. The national base beneficiary premium may change each year, so the late-enrollment penalty may also change each year. Beneficiaries may have to pay the late-enrollment penalty the whole time they’re enrolled in a Medicare Prescription Drug Plan.
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