Enroll at 65 to Avoid Medicare Late Penalties
Timely enrollment for Original Medicare and Part D eliminates late penalties that can last
Reviewed by: Shikita Nunnery, Licensed Insurance Agent. Written by: Aaron Garcia.
Medicare late enrollment penalties are applied to Part AMedicare Part A, also called "hospital insurance," covers the care you receive while admitted to the hospital, skilled nursing facility, or other inpatient services. Medicare Part A is one of the pain parts of Original Medicare., Part BMedicare Part B is the portion of Medicare that covers your medical expenses. Sometimes called "medical insurance," Part B helps pay for the Medicare-approved services you receive. and Part DMedicare Prescription Drug Plan (Part D) is prescription drug coverage for people enrolled in Medicare. Part D is optional and is offered by private insurance companies..
To avoid Part A and Part B penalties, you must sign up when you turn 65.
The Part D penalty is applied when you go more than 63 days without prescription drug coverage.
The part B late enrollment penalty is a lifetime penalty that is paid as long as you’re on Medicare.
The Part D late enrollment penalty is a lifetime penalty you’ll pay as long as you have a plan that covers your prescription drug costs.
The longer you delay enrollment in Part A, the longer you’ll pay a late enrollment penalty.
If you had other coverage, you may be able to delay enrollment without penalty.
For most, Medicare is broken into three main parts: Part A (hospital coverage), Part B (medical coverage) and Part D (prescription drug coverage). To encourage enrollment in these programs, Medicare has instituted late enrollment penalties that are long-lasting and increase with time. There are cases, though, when you can delay enrollment without penalty.
Here’s a breakdown of Medicare’s late enrollment penalties, and when you can avoid them:
Medicare has late enrollment penalties in place for its three main parts:
- Medicare Part A
- Medicare Part B
- Medicare Prescription Drug Plan (Part D)
If you don’t enroll in Medicare in time, you may accrue three separate late enrollment penalties for each if you don’t have other coverage.
Even worse, you’re not just hit with a one-time fee. Instead, Medicare’s late enrollment penalties increase over time and can last as long as you’re enrolled. The longer you wait to sign up, the costlier your penalties will be.
The rule: For every year you weren’t enrolled in Part A, you’ll pay a 10% penalty for two years.
If you worked 10 or more years, you probably won’t have a Part A premium to pay each month. If you qualify for no-cost Part A coverage and miss your enrollment, you won’t be charged a late enrollment penalty when you enroll.
If you worked between 7.5 and 10 years, you would have paid a $259 Part A monthly premium in 2021; those that worked less than 7.5 years paid $471 per month.
An Example of a Part A Late Enrollment Penalty
If you worked for eight years and signed up for Part A three years late, you’ll pay:
- Part A premium: $259 per month.
- 10% penalty: $25.90 per month.
- Part A premium amount with penalty: $284.20 for six years.
The Part A Late Enrollment Penalty will be tacked onto your premium for six years because you signed up three years late. When the six years is over, your Part A premium will drop back to the regular amount.
The rule: You’re assessed a 10% penalty for every year you didn’t sign up after becoming eligible. You’ll continue to pay this late enrollment penalty for as long as you have Part B.
Unlike Part A, all Medicare beneficiaries have a monthly premium payment for Part B coverage. The premium amount for Part B, which covers medical expenses, is income-based; individuals making $88,000 or less annually paid the standard premium payment of $148.50 in 2021. Those with the highest incomes may pay as much as $504.90 each month.
An Example of a Part B Late Enrollment Penalty
Let’s say you’re single and make $80,000 per year. Let’s also say you didn’t take part in Medicare Part B enrollment until three years after you became eligible. In this case, you’ll pay:
- Medicare Part B Premium in 2021: $145.80 per month.
- 30% late enrollment penalty (3 years late at 10% each): $43.74 monthly.
- Part B premium amount with penalty: $189.54 per month.
Remember, the Part B late enrollment penalty is a lifetime penalty, so you’ll pay the extra $43.74 per month as long as you’re enrolled in your Part B plan. If you’re in the higher income brackets, missing your Part B enrollment could mean you’re stuck paying hundreds, or more, in enrollment penalties each year.
The rule: You’ll pay an extra 1% of the average Part D premium for each month you don’t enroll and don’t have creditable coverage.
Medicare Part D covers prescription drugs and has its own monthly premium. And like Part B, your Medicare Part D cost is partly based on your income. But Part D doesn’t have a standard charge. Instead, you’ll pay an Income-Related Monthly Adjustment Amount (IRMAA) if you make $88,000 per year or more. These range from $12.30 to $77.10 per month.
Because there’s not a standard payment amount, the Medicare Part D penalty is calculated using the national average for Part D premiums. That amount is $32.74 in 2020, and $33.06 in 2021.
An Example of a Part D Late Enrollment Penalty
To make it easy, let’s pretend you make $60,000 per year, don’t have other prescription drug coverage and didn’t enroll in a Part D plan for one year. Your Medicare Part D penalty would be:
- Average Medicare Part D premium in 2021: $33.06.
- 12% late enrollment penalty (1% each month for 12 months): $3.97 per month.
- Part D premium amount with penalty (based on 2020 average): $37.03 per month.
Like Part B, you’ll pay the Part D late enrollment penalty as long as you have Part D coverage.
You can delay enrolling in Medicare and avoid late enrollment penalties if you have other creditable coverage.
Parts A and B
This usually includes active employment group coverage through your or your spouse’s job-based plan. Once that coverage ends, an eight-month special enrollment period begins.This allows you to enroll in Medicare Parts A, B and D without penalty. 
Aside from job-based group plans, creditable coverage can also include Marketplace plans. While you’re encouraged to enroll in Medicare when you turn 65, a Marketplace plan may be cheaper if you haven’t yet worked long enough to qualify for premium-free Part A. If you decide to enroll in Medicare Parts A and B later, you won’t be penalized.
While you can delay enrolling in Medicare Prescription Drug Plan (Part D) if you have other coverage, your window to find new coverage before getting hit with a late penalty is much smaller. If you go 63 days without creditable drug coverage, your late enrollment clock starts ticking.  Remember, you’ll accrue a 1% penalty for each month you don’t have coverage after those 63 days.
Can I appeal my late enrollment penalty?
If you were given incorrect information that caused you to make an error when enrolling, you may qualify for equitable relief. If this happens, you may have a reduction or elimination of your penalty.
How do I know when my enrollment deadline is?
This is known as your Initial Enrollment Period, and it’s a seven-month window around the month you turn 65. It begins three months before your birth month, and ends three months after.
For example: if your birthday is June 15, your IEP begins March 1 and ends September 30.
When can I sign up if I missed my IEP?
There are a few things you can do if you missed your IEP. The first place to start may be finding your next available enrollment period.
- Open Enrollment Period: October 15 to December 7; plans start January 1 the following year.
- General Enrollment Period: January 1 to March 31; plans start July 1.