Your mother turned 65 three years ago and didn't sign up for Part B because she rarely sees doctors. Now she wants to enroll, and you've heard there's a penalty. You're not sure how big it is, how long it lasts, or whether there's any way around it.
Medicare's late enrollment penalties surprise a lot of families. Here's how each one works.
The three penalties at a glance
| Part | When it applies | How long it lasts |
|---|---|---|
| Part A | If you must buy Part A and don't sign up when first eligible | Twice the number of years you could have had Part A but didn't |
| Part B | If you don't sign up when first eligible and don't qualify for a Special Enrollment Period | Usually for as long as you have Part B |
| Part D | If you go 63 days or more in a row without Part D or other creditable drug coverage after your Initial Enrollment Period | Usually for as long as you have drug coverage |
All three penalties come from Medicare's rules on late enrollment1. They are added to the monthly premium, not charged as a single bill. If you're new to Medicare, our Medicare open enrollment guide explains the yearly enrollment windows.
Part A penalty
Most people get premium-free Part A because they or a spouse worked and paid Medicare taxes long enough. They don't face a Part A penalty. The penalty only applies to people who have to buy Part A and don't sign up when they're first eligible1.
In that case, the monthly premium may go up 10 percent, and your parent would pay the higher premium for twice the number of years they could have had Part A but didn't sign up1. For example, someone who waited two years would pay the higher premium for four years.
Part B penalty
If your parent doesn't sign up for Part B when first eligible, and doesn't qualify for a Special Enrollment Period, they may have to pay a late enrollment penalty for as long as they have Part B1. The monthly premium goes up 10 percent for each full 12-month period they could have had Part B but didn't sign up1.
For example, if your parent waited two full years, the premium would be 20 percent higher than the standard premium, usually for life. Because the standard premium changes every year, so does the penalty amount. This is the penalty that catches the most people, often those who assumed they didn't need Part B because they were healthy.
Part D penalty
The Part D penalty applies if, after the Initial Enrollment Period ends, your parent goes 63 days or more in a row without a Medicare drug plan, a Medicare Advantage plan with drug coverage, or other creditable prescription drug coverage1. Creditable coverage is drug coverage expected to pay, on average, at least as much as standard Medicare drug coverage.
Medicare calculates the penalty by multiplying 1 percent of the national base beneficiary premium by the number of full months your parent went without coverage1. That's roughly 12 percent for each year without coverage. The amount is rounded and added to the monthly premium, and it changes each year as the base premium changes. Your parent usually pays it for as long as they have Medicare drug coverage1.
Special Enrollment Periods: when waiting is safe
Many people don't need Part B at 65 because they or a spouse are still working and covered by a group health plan based on current employment. They can usually delay Part B and sign up later during a Special Enrollment Period without a penalty2. This period generally lasts while covered by the job-based plan and for eight months after the job or coverage ends, whichever comes first2.
Important details: coverage must be from current employment, not retiree coverage or COBRA. COBRA and retiree plans don't count for delaying Part B, which surprises many people. If your parent works for a small employer, their plan may require them to take Medicare at 65. Before delaying, ask the employer's benefits office how their plan works with Medicare.
Avoiding the Part D penalty
The simplest way to avoid the Part D penalty is to keep some form of creditable drug coverage at all times. If your parent has drug coverage from an employer, union, TRICARE, VA or other source, the plan should send a yearly notice saying whether it's creditable. Keep those notices; they're proof if Medicare later asks.
Your parent won't pay a Part D penalty if they qualify for Extra Help, the program that helps with drug plan costs1. See Extra Help with Part D. Even someone who takes no medicines now may want a low-premium drug plan to avoid a penalty later.
Help for people with limited income
If your parent qualifies for a Medicare Savings Program, they generally won't have to pay a Part B late enrollment penalty1. These state programs help pay Medicare premiums and sometimes other costs for people with limited income and savings. See the Medicare Savings Program. Many people who qualify don't know it, so it's worth checking.
How you find out about a penalty
For Part D, your parent's drug plan will tell them if they owe a penalty and how much1. The plan may first send a form asking about past drug coverage; fill it out and return it promptly, because the answers determine whether a penalty applies. For Part B, the penalty shows up in the premium on the Medicare bill or in the amount taken out of a Social Security check.
Appealing a penalty
If your parent thinks a Part D penalty is wrong, for example because they had creditable coverage, they can ask for a reconsideration1. The plan's letter explains how and the deadline to respond. Gather proof, such as notices of creditable coverage or letters from former employers. For Part B penalties, contact Social Security, which handles Part B enrollment.
Keep copies of everything you send, and write down the date and name of anyone you speak with. If your parent was given wrong information by a government employee, explain that; there are sometimes ways to get relief in those cases.
Common mistakes
Families often run into penalties for the same few reasons. A parent assumes they don't need Part B because they're healthy. A parent keeps COBRA or retiree coverage and doesn't realize it doesn't count for delaying Part B. A parent drops a drug plan because they don't take many medicines. A parent moves abroad and doesn't sign up. A parent's employer plan was not creditable drug coverage. Talking through your parent's coverage before 65, and again before retiring, avoids most of these.
Medicare Advantage and Medigap
A Medicare Advantage plan doesn't remove a Part B penalty, because your parent must have Part B to join. If the Advantage plan includes drug coverage, it counts as Part D coverage going forward. Medigap has its own timing rules: the best time to buy is during the Medigap open enrollment period after Part B starts, when insurers generally can't deny coverage based on health. See Medigap vs. Medicare Advantage.
Getting free help
Every state has a State Health Insurance Assistance Program, or SHIP, that offers free, unbiased Medicare counseling. A SHIP counselor can review your parent's situation, check whether a penalty applies, and help with appeals. Find your local SHIP through the Eldercare Locator5. If you're helping a parent who has trouble with paperwork, see managing an elderly parent's finances.
A checklist before 65
A few months before your parent turns 65, sit down together and answer these questions: Will they get premium-free Part A? Are they or their spouse still working with a group plan? Is that plan from current employment, and how large is the employer? Does their drug coverage count as creditable? Do they qualify for Extra Help or a Medicare Savings Program? Write down the answers and the dates, and keep the paperwork. If anything is unclear, call a SHIP counselor before the enrollment window closes.
When a parent can't manage enrollment
Enrollment deadlines are easy to miss for a parent with memory problems or a recent hospital stay. If your parent has early dementia, set calendar reminders for enrollment windows and plan notices, and open Medicare mail together. Make sure you have legal authority to act if needed; see power of attorney for an elderly parent. Bring up coverage questions at the Medicare annual wellness visit too, since the doctor's office often sees billing problems first. If a parent recently lost a spouse and with it employer coverage, act quickly: the Special Enrollment Period clock starts when that coverage ends.
An example
Robert retired at 64 and kept his former employer's retiree health plan. At 67 he learned that retiree coverage doesn't count for delaying Part B, and he faced a penalty for the two full years he'd gone without it. He also found that his retiree plan's drug coverage was creditable, so he had no Part D penalty. A SHIP counselor helped him enroll during the next General Enrollment Period and checked whether he qualified for a Medicare Savings Program. This is an illustration; your parent's situation will depend on their coverage history.
