The True Cost of Skipping Medicare Part B or Part D
Most financial mistakes can be corrected. You can pay off a credit card. You can refinance a mortgage. You can put more money into a retirement account next year.
Not this one.
The Medicare late enrollment penalty for Part B and Part D is permanent. It does not phase out after a few years. It does not disappear when you turn a certain age. It follows you from the day it is assessed until the last day you have Medicare coverage.
For people who make this mistake, even through innocent misunderstanding, the cumulative cost over a lifetime of retirement can be thousands, sometimes tens of thousands of dollars.
This article explains exactly how the penalties work, what they cost in real dollars, and most importantly, how to avoid them.
How Medicare Enrollment Works (The Basics)
When you become eligible for Medicare, you have specific windows to enroll. The primary window is the Initial Enrollment Period (IEP), a seven-month period centered on your 65th birthday (three months before, your birthday month, and three months after). Our guide on when to sign up for Medicare explains these standard windows in detail.
If you miss these windows without a qualifying reason, you are assessed a late enrollment penalty. And unlike most late fees in life, this one never goes away.
There are legitimate reasons to delay enrollment without penalty, primarily if you have active coverage through an employer with 20+ employees. Outside of this and a handful of other qualifying situations, delaying Medicare enrollment means accumulating penalty months. If a qualifying life event applies to you, our complete guide to Medicare Special Enrollment Periods explains how those windows work and how to use them to avoid a penalty.
The Medicare Part B Late Enrollment Penalty
How It Is Calculated
For every 12-month period you were eligible for Part B but did not enroll (without a qualifying reason), you permanently pay an additional 10% of the standard Part B Premium.
Formula:
Number of 12-month penalty periods × 10% × standard Part B premium = monthly penalty
The penalty is assessed on the standard Part B premium, currently $202.90 per month in 2026, and is recalculated each year when the standard premium changes. Use our Part B penalty calculator to estimate what you would owe based on your own enrollment timeline.
Real-Dollar Examples
Scenario 1: 12 months late
1 year late × 10% × $185 = $18.50/month additional premium
Annual cost: $222
10-year cost: $2,220 (before premium increases)
Scenario 2: 24 months late
2 years late × 10% × $185 = $37/month additional premium
Annual cost: $444
10-year cost: $4,440 (before premium increases)
Scenario 3: 36 months late
3 years late × 10% × $185 = $55.50/month additional premium
Annual cost: $666
10-year cost: $6,660 (before premium increases)
Note that the standard Part B premium typically increases each year, which means the penalty amount in dollar terms increases over time even though the percentage stays fixed.
Who Is Most at Risk for the Part B Penalty
People who work past 65 at a small company. If your employer has fewer than 20 employees, Medicare becomes your primary coverage at 65. Staying on that small-employer plan without enrolling in Part B means you are accumulating penalty months.
People who assume COBRA counts as employer coverage. COBRA does not protect you from the Part B late enrollment penalty. The SEP for Part B runs from when active employer coverage ends, not from when COBRA ends.
Note: This applies specifically to Part B. If your COBRA coverage includes Creditable Prescription Drug Coverage, you will have a Part D Special Enrollment Period when that COBRA coverage ends.
People who retire early and go on a spouse’s employer plan. If you are added to your spouse’s employer plan after your 65th birthday (rather than continuing coverage you already had), it may not count as a qualifying exception.
Self-employed individuals. Some self-employed people purchase their own health insurance and do not realize that individual market plans do not protect against the Part B late enrollment penalty.
The Medicare Part D Late Enrollment Penalty
How It Is Calculated
For Part D, the penalty is based on the national base beneficiary premium, not your specific plan’s premium. The penalty is:
1% of the national base beneficiary premium × number of months you went without creditable drug coverage
The national base beneficiary premium in 2026 is approximately $38.99/month (this changes each year). If your prior drug coverage may not have met Medicare’s standard, our guide on what counts as Medicare Creditable coverage explains how to check.
Unlike Part B, the penalty is recalculated each year based on the current base premium. The percentage you owe (1% per month) stays fixed, but the dollar amount fluctuates.
Real-Dollar Examples
Scenario 1: 12 months without creditable coverage
12 months × 1% × $38.99 = 12% penalty = $4.68/month (rounded to $4.70)
Annual cost: $56.40 10-year cost (with modest premium increases): approximately $650+
Scenario 2: 24 months without creditable coverage
24 months × 1% × $38.99 = 24% penalty = $9.36/month (rounded to $9.40)
Annual cost: $112.80 10-year cost: approximately $1,300+
Scenario 3: 36 months without creditable coverage
36 months × 1% × $38.99 = 36% penalty = $14.04/month (rounded to $14.00)
Annual cost: $168.00 10-year cost: approximately $1,900+
The Part D penalty appears smaller on a monthly basis than the Part B penalty, but over decades, it adds up, particularly as the base premium increases and the percentage penalty multiplies against a larger base. Our Part D penalty calculator can help you estimate your own potential cost. You can also read more in our guide to the Medicare Part D late enrollment penalty.
Who Is Most at Risk for the Part D Penalty
People who feel healthy and decline drug coverage. “I do not take any medications” is the most common reason people skip Part D. But the penalty is permanent, and the person who needs a $500/month medication at age 78 will pay a penalty for the rest of their life based on the gap they created at 65.
People with non-creditable drug coverage. If your health plan does not include drug coverage that meets Medicare’s standard (creditable coverage), you are accumulating Part D penalty months even if you think you have drug coverage.
People who forget to enroll in Part D when they transition from employer coverage. When you leave employer coverage, you have 63 days to enroll in Part D without penalty. Missing this narrow window starts the clock.
The Lifetime Cost: Running the Numbers
Most people underestimate how long they will be on Medicare. The average person who reaches 65 today can expect to live until their late 80s, more than 20 years of Medicare coverage.
Let’s look at the lifetime cost of a modest late enrollment penalty.
A note on how the Part B penalty period is counted: The Part B penalty applies for every full 12-month period you were eligible but did not enroll. CMS counts only complete 12-month periods, so 18 months late still counts as 1 full penalty period (10%), not 1.5.
Part B, 24 months late (2 full penalty periods):
Penalty: 20% = $37/month in 2026
Over 20 years (with 3% annual premium increases):
Approximate lifetime cost: $12,000+
Part D, 24 months without creditable coverage:
Penalty: 24%
Over 20 years (with modest base premium increases):
Approximate lifetime cost: $3,500+
Combined late enrollment for both: Over $15,000 paid as a penalty, money that bought nothing extra in terms of coverage.
The Real Reason People Make This Mistake
Medicare late enrollment penalties are not just a problem for people who are reckless or uninformed. They catch many careful, intelligent people who misunderstood the rules:
The person who thought their ACA Marketplace plan counted as employer coverage. Individual health plans, even good ones, do not protect against Medicare late enrollment penalties.
The person who retired early and lost track of time. After retiring at 63 on a spouse’s employer plan, they turned 65 and did not realize they needed to act independently.
The person who was given incorrect advice. An HR department, financial advisor, or family member told them they did not need Medicare yet.
The person who was dealing with a major life event. A spouse’s illness, a parent’s care, a business challenge: amid all of it, Medicare paperwork fell through the cracks.
The penalty is assessed regardless of the reason. “I did not know” is not a waivable circumstance in Medicare’s penalty rules (with very narrow exceptions).
How to Avoid the Penalties
Enroll on time. During your Initial Enrollment Period, enroll in Part A and Part B (unless you have qualifying large-employer coverage), and enroll in Part D or confirm you have creditable drug coverage.
Know your exceptions. If you are delaying Part B because of active employer coverage from a large employer, document this carefully. Keep records of your coverage and your employer’s size.
Read your creditable coverage notice. Your employer or drug plan sends an annual notice by October 15 saying whether your drug coverage is “creditable.” Read it and keep it.
Act immediately when coverage ends. When employer coverage ends, you have 8 months for Part B (start sooner, not later) and 63 days for Part D. Do not wait.
Use the REMEDIGAP penalty calculators. Our Part B and Part D penalty calculators help you understand exactly what you might owe based on your situation.
Consult a licensed Medicare advisor. A qualified advisor can review your specific situation and confirm whether a valid exception applies before you miss a deadline.
Can Penalties Ever Be Waived?
In rare circumstances, Medicare may waive or reconsider a penalty. Valid grounds include:
- Evidence that you had creditable coverage during the claimed period
- Evidence that you enrolled timely and there was an administrative error
- Qualifying for Extra Help (Low Income Subsidy), which can reduce or eliminate the Part D penalty
Appeals must be submitted within specific timeframes. Most attempts to waive penalties based on misunderstanding or not knowing the rules are not successful.
If you believe a penalty was incorrectly assessed, contact Medicare at 1-800-MEDICARE and request a review.
Frequently Asked Questions
I am 68 and just found out I should have enrolled in Part B at 65. What should I do now?
Enroll in Part B during the next General Enrollment Period (January 1–March 31). Under current rules, your coverage begins the first day of the month after you sign up. You will pay a penalty for each 12-month period since you first became eligible (typically your 65th birthday). The penalty is permanent.
I have been on my wife’s employer plan since 65. Her employer has 50 employees. Am I protected from the Part B penalty?
Yes. Employer coverage from a company with 20 or more employees protects you from the Part B late enrollment penalty. When your wife’s employer coverage ends, you have 8 months to enroll in Part B with no penalty. Document your coverage carefully.
I declined Part D because I do not take any medications. Now I need a medication. What are my options?
You can enroll in Part D during the Annual Enrollment Period (October 15–December 7). However, you will pay a late enrollment penalty based on the number of months since you first became eligible for Part D without creditable coverage. This penalty is permanent.
My employer said my drug coverage is not creditable. When should I enroll in Part D?
As soon as possible. If you are past your initial Medicare enrollment window, enroll during the next Part D enrollment opportunity. Every month without creditable coverage adds to your eventual penalty.
Bottom Line
The Medicare late enrollment penalty is one of the harshest financial consequences in the federal benefit system. It is permanent, it is calculated on every premium for the rest of your life, and the rules that trigger it are often poorly understood.
The good news: it is completely avoidable with proper planning.
Enroll in Part B during your Initial Enrollment Period (or protect yourself with qualifying employer coverage). Enroll in Part D or confirm your existing drug coverage is creditable. Act promptly when coverage ends.
REMEDIGAP’s Part B and Part D penalty calculators are available free on our website to help you understand your exact situation. And our licensed advisors are available to review your enrollment history and help you avoid this permanent mistake.
This article is for educational purposes. Penalty formulas, premium amounts, and Medicare rules change annually. Verify current penalty rates and calculations at Medicare.gov or through a licensed Medicare advisor.
💡 Your next step: Once enrolled in Part B, most beneficiaries also add a Medicare Supplement plan to cap their remaining cost-sharing — compare current rates.
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Written by Michael Quinn
Licensed Broker, REMEDIGAP Founder
Fact Checked by Joann Quinn
Chief Compliance Officer
As a licensed insurance broker, REMEDIGAP upholds the principles of integrity in our editorial standards and ensures transparency in how we receive compensation from our insurance partners.