If you’ve heard that delaying Medicare can cost you, you’re right — and those costs can follow you for the rest of your life. This is why it’s importnat to enroll during your annual enrollment period (AEP) if possible.
The challenge is that Medicare’s rules aren’t always straightforward, especially when it comes to what counts as “creditable coverage” and when you’re allowed to delay enrollment without triggering a penalty.
The good news? Once you understand the basics, you can avoid Medicare late payment penalties completely. Here’s what you need to know — in plain English — before making any decisions about delaying Part B or Part D.
What Medicare Late Enrollment Penalties Are (and Why They Exist)
Medicare late enrollment penalties are permanent monthly surcharges added to your premium if you wait too long to sign up for certain parts of Medicare without having creditable coverage.
They apply to:
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Part B (medical coverage)
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Part D (prescription drug coverage)
These penalties are designed to encourage people to get into the program when they’re first eligible — so the risk pool stays stable. But here’s the kicker: the penalties never go away.
Once they’re added to your premium, you pay them every single month, for as long as you have Medicare.
The Part B Late Enrollment Penalty
Part B covers things like doctor visits, outpatient care, durable medical equipment, physical therapy, labs, imaging, and more. It’s the part of Medicare most people use regularly.
If you delay enrolling in Part B and you don’t have creditable coverage, you’ll be charged a penalty.
How the Part B penalty is calculated:
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10% of the standard Part B premium
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For every 12-month period you delayed enrollment
How long it lasts:
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For life — as long as you have Part B
So if you delayed Part B for two full years without creditable coverage, you’d pay a 20% penalty every month on top of the standard Part B premium.
How to avoid it:
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Enroll during your Initial Enrollment Period (IEP), OR
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Delay Part B only if you have creditable employer or union coverage, then use your Special Enrollment Period (SEP) once that coverage ends
The Part D Late Enrollment Penalty
Part D covers prescription drugs — and even if you don’t take any medications today, you still need to understand these rules.
If you go 63 days or longer without creditable drug coverage, you’ll pay a penalty.
How the Part D penalty is calculated:
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1% of the national base beneficiary premium (this amount changes every year)
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Multiplied by the number of full months you went without coverage
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Added to your Part D premium for life
Example:
If you delayed enrollment for 12 months, you’d pay 12% of the base premium for as long as you have Part D.
How to avoid it:
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Enroll during your Initial Enrollment Period, OR
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Keep creditable drug coverage through an employer, retiree plan, VA, or TRICARE
What Counts as “Creditable Coverage”?
Creditable coverage is health or drug insurance that is at least as good as Medicare’s minimum standards.
Here’s what usually counts:
For Part B (part of Original Medicare):
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Employer coverage from a company with 20+ employees
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Union coverage
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Federal Employee Health Benefits (FEHB)
For Part D (drug coverage):
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Employer or retiree drug plans
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VA drug coverage
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TRICARE
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Some COBRA coverage (but not all)
The confusing part is that not every employer plan qualifies, and some HR departments mistakenly tell employees that “you’re fine to delay Medicare” when you’re actually not.
Tip: Ask your employer for a written creditable coverage statement — then keep it for your records.
What Happens If You Miss Your Enrollment Window?
If you delay Part B without creditable coverage, you won’t be able to sign up until the General Enrollment Period (January 1–March 31), and your coverage won’t start until July 1.
That creates two problems:
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You’re uninsured for months
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You’ll owe the lifetime penalty
The same applies for Part D: if you miss your window and can’t prove creditable drug coverage, the late enrollment penalty starts as soon as you enroll.
Who’s Most at Risk for Medicare Late Payment Penalties?
These penalties tend to hit people who:
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Delay Medicare because they “feel healthy”
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Go on COBRA thinking it counts (it often doesn’t)
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Stay on a spouse’s employer plan without confirming it’s creditable
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Are self-employed and buying insurance on the individual market
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Retire mid-year and don’t realize their SEP clock already started
If any of these sound like you, it’s time to double-check your coverage.
How to Avoid Medicare Late Payment Penalties
Here’s a quick checklist to keep yourself protected:
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Don’t guess — confirm. Ask your employer for a written statement showing your coverage is creditable.
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Know your dates. Your Initial Enrollment Period lasts 7 months.
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Don’t miss the 63-day rule for Part D.
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Enroll in Part B and/or Part D immediately if you lose coverage or stop working.
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Talk to someone who knows the rules. Not all HR staff or insurance agents understand Medicare timelines.
FAQs
Can I appeal a Medicare late enrollment penalty?
Yes, but only if you can prove you had creditable coverage or received incorrect written information.
Does COBRA count as creditable coverage for Medicare?
Sometimes for drugs, rarely for medical. Most people on COBRA still need to enroll in Medicare to avoid penalties.
If I don’t take medications, can I skip Part D?
You can, but you’ll owe a penalty later unless you have creditable drug coverage in the meantime.
Does retiree coverage count as creditable?
Often yes — but always confirm, because programs vary widely.
If I missed my deadline, what do I do now?
Enroll as soon as the next window opens (General Enrollment for Part B or AEP for Part D) to stop the penalty from growing.
When Brickhouse Can Help (and When Medicare.gov Is Enough)
If you’re preparing for retirement, losing employer coverage, or trying to understand whether your current plan is creditable, Brickhouse can:
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Review your coverage to determine if it meets Medicare’s rules
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Help you avoid penalties by guiding you through the IEP or SEP
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Assist with Part B, Part D, and Medicare Advantage or Medigap choices
If you’re only comparing standalone Part D plans, Medicare.gov is a great tool — but for everything else, personalized guidance can save you from costly mistakes.
Talk through your enrollment timeline with Brickhouse and avoid penalties before they start.
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Written by Niki Feret
Licensed Independent Medicare Insurance Agent
Founder, Brickhouse Agency & Chicagoland Medicare
As a female agency owner in a space that’s often dominated by call centers and cookie-cutter advice, I started Brickhouse to do things differently.
We’re a boutique Medicare agency—real people helping real people. No scripts, no pressure, and no one-size-fits-all recommendations. Just thoughtful, personalized guidance that helps you make confident Medicare decisions.
If you’re ready to feel supported—not sold—
Schedule a free consultation here. There’s no cost and no obligation to enroll. Ever.
