Avoid Medicare Late Penalties by Knowing When to Enroll
Forgetting to enroll in Medicare on time may subject you to annual penalties as high as ten percent of your premium
Reviewed by: Michael Howard, Licensed Insurance Agent. Written by: Aaron Garcia.
Missing your Initial Enrollment Period (IEP) can earn you late penalties for Medicare Part A, Medicare Part B and Prescription Drug Plan (Part D)
Part B and Part D enrollment penalties are lifetime penalties; Part A is limited to two years for every year you delayed enrollment
You may be able to delay enrollment without penalty if you had other coverage through an employer
For all the helpful benefits Medicare offers, there is one thing you’ll want to avoid: enrollment penalties. If you sign up late, you may be stuck paying a higher monthly premium amount for years.
Is it mandatory to go on Medicare when you turn 65? No, but if you don’t, each part of Medicare is subject to its own enrollment penalty. Skipping your Initial Enrollment Period could mean you’re on the hook for three different Medicare late enrollment penalties. That includes:
- Medicare Part A
- Medicare Part B
- Medicare Prescription Drug Plan (Part D)
Here’s a breakdown of Medicare’s different late enrollment penalties, and what you may be able to do if you didn’t enroll on time.
The penalty: For every year you weren’t enrolled in Part A, you’ll pay a 10% penalty for two years.
Medicare Part A is the portion of Original Medicare that provides your hospital coverage. If you worked 10 or more years, you probably don’t have to pay a monthly premium for Part A. If you worked between 7.5 and 10 years, you’ll pay a $259 Part A monthly premium in 2021; you’ll pay $471 per month if you worked fewer than 7.5 years.
Example: Part A late enrollment penalty
If you worked for eight years and signed up for Part A four years late, you’ll pay:
- Part A premium: $259 per month
- 10% penalty: $25.90 per month
In this example, you’ll pay a Part A premium (with penalty) of $284.90 for eight years.
Part A late penalty exception
If you delayed enrolling in Medicare Parts A and B because you or your spouse had group coverage through your job, you may qualify for a Special Enrollment Period when that coverage ends. In this case, you may avoid a Part A enrollment penalty.
The penalty: A 10% increase to your monthly premium for every year you didn’t enroll on time. You’ll continue to pay this late enrollment penalty for as long as you’re enrolled in Part B
Part B provides the medical portion of your Original Medicare coverage. In 2021, the standard Medicare Part B premium will be $148.50 for anyone making up to $88,000 per year ($176,000 for couples). Depending on your income, your Part B premium can increase as high as $504.90. Unlike Part A, you’ll probably have to pay a monthly Part B premium each month, so enrolling on time can have a huge impact on your Medicare costs.
Example: Part B late enrollment penalty
What happens if I don’t sign up for Medicare Part B at 65?
If you make $80,000 per year or less, but enroll two years late, you’ll pay:
- Medicare Part B Premium 2021: $148.50 per month
- 20% late enrollment penalty (2 years late at 10% each): $29.70 monthly
In this example, your Part B premium amount with penalty will be $178.20.
Part B late penalty exception
You may be able to delay enrollment in Part B if you had group coverage when you turn 65. If you’re planning to delay your retirement, make sure to have proof of your coverage when you do enroll in Medicare. When your group coverage ends, an eight-month Special Enrollment Period will open when you can enroll without penalty. 
The penalty: An extra 1% of the average Part D premium for each month you don’t enroll and don’t have creditable coverage.
In 2021, the average Part D premium is $43.07. Part D is offered by private insurance companies and varies by geographical area. Like Part B, Part D is income-based; the highest incomes may pay up to an extra $77.10 per month for their Part D monthly premium. 
Part D late penalty exception
If you go more than 63 days without creditable prescription coverage, you may be assessed a Part D enrollment penalty. If so, you’ll receive a notice through the mail. This notice will include a Late Enrollment Period Reconsideration Notice. To challenge your enrollment penalty, return this form with proof of your previous coverage. 
If you’ve missed your IEP, you may qualify for a Special Enrollment Period (SEP) under certain circumstances. If so, you’re allowed to enroll in a Medicare plan after your IEP without penalty. Special Enrollment Periods open after certain events, including:
- Loss of other coverage
- Medicare changes its contract with your plan
- And more 
If you have health insurance through a job-based group plan, an eight-month SEP will open when that coverage ends. At that point, you can sign up for Medicare without penalty. SEPs that open for different reasons may have different timeframes.
When am I supposed to sign up for Medicare?
The year you turn 65. Three months before your birth month, your Initial Enrollment Period opens. It remains open for you to enroll until three months after your birth month, for a seven-month window.
I missed my IEP and don’t qualify for an SEP -- when do I sign up?
Your next chance to enroll in Medicare is the General Enrollment Period. This is held each year from January 1 to March 31. If you enroll during the GEP, your plan begins July 1. In this case, you’ll probably have to pay late enrollment penalties.
What if I enroll late because I received incorrect information from a Medicare or Social Security representative?
You may qualify for equitable relief if you enroll incorrectly and incur a penalty. Some people know this as the Medicare Part B late enrollment penalty appeal. To file your appeal, you’ll need to provide proof to the Social Security Administration.  If your appeal is accepted, you may see a reduction or elimination of your penalty, and even receive retroactive coverage.