When you’re first eligible for Medicare, it’s crucial to verify and do a few things to ensure you don’t receive a penalty for late enrollment into different parts of Medicare.

How Medicare Late Enrollment Penalties Work

Different parts of Medicare come with late enrollment penalties. These penalties fall under Part A & Part B. There’s also a penalty if you don’t take Part D when first eligible.

Part A Late Enrollment Penalty

For most Americans, this will not apply as they qualify for Medicare Part A for $0 premium due to working for at least ten years themselves or their spouse.

Those not in this situation must enroll in Part A when they’re first eligible unless they have creditable coverage. If they don’t have creditable coverage and don’t start their Part A, they have a Medicare Late-Enrollment-Penalty.

How the Part A Late-Enrollment-Penalty Works

If you don’t take Part A when first eligible and don’t have creditable coverage, you’ll be subject to a 10% penalty on your Part A premium for twice as long as you did not have coverage.

For example, if you don’t take your Part A for four years, you’ll pay the increased premium for the next eight years. If you’re considered low income, you may qualify for programs that will pay the Part A premium for you.

Part B Late Enrollment Penalty

The Medicare Part B penalty applies to beneficiaries that don’t take their Medicare Part B when first eligible and did not have creditable coverage.

Medicare has a premium for Part B unless you qualify for a Medicare Savings Program that will pay it for you. The Part B premium is calculated based on how many years you delayed enrolling into Part B and didn’t have another form of creditable coverage.

How the Part B Late-Enrollment-Penalty Works

The Part B penalty is 10% of the Part B premium for every consecutive 12- month period you were eligible for but did not elect coverage.

For example, if you went four years, 48 months, without taking Part B once you were eligible and did not have creditable coverage, you’ll have a 40% penalty on top of the standard Part B premium. The current Part B premium is $170.10, you would be paying an additional $80 per month for the rest of your life.

Part D Late Enrollment Penalty

Similar to the Part A and Part B penalties, the drug coverage penalty revolves around not taking the coverage when first eligible. The drug coverage penalty is also called the Part D penalty. Qualifying for the low-income subsidy program (Extra Help) will waive the penalty.

How the Part D Late-Enrollment-Penalty Works

For each month you don’t enroll or have creditable coverage, you’ll accrue a 1% penalty of the average monthly drug plan cost.

Let’s assume you went four years without taking drug coverage. You’ll receive a 1% penalty that compounds monthly. You would have a 48% penalty. The current average Part D premium is a little more than $33. Your Part D penalty would be about $14 a month.

No matter which drug plan you were to enroll in, you would pay an additional $14 a month on top of your plan’s premium for the rest of your life.

How to Avoid Medicare Late-Enrollment-Penalties

Avoiding these penalties is relatively easy. As long as you worked for 10 years, or your spouse has, then you get Part A premium free. Whether you need it or not, it makes sense to enroll anyway.

If you’re working, contact your benefits administrator for your group coverage. Ask if the group coverage is creditable coverage under Medicare. If so, you don’t need to enroll. However, you can still enroll in Part A since it’s premium-free.

You get a Special Enrollment Period to enroll in Medicare when your group coverage ends. If your employer has less than 20 employees, then the group coverage is not considered creditable.

If you have VA coverage, enroll in Part B when you’re first eligible. This is because VA benefits are not considered creditable coverage under Medicare Part B. However, VA benefits are considered creditable under Part D.

How to Eliminate Medicare Late Enrollment Penalties

There are a few ways to try and get the penalty waived. You can contact Social Security to appeal the late enrollment penalty. If you have a low income, you can apply for the Extra Help program or the Medicare Savings Program.

If you’re dual-eligible for Medicare & Medicaid, then you could be eligible for a Medicare Savings Program. These programs will waive or pay for any penalties you may have incurred.

Your penalities will also disappear if you accrued them when you were under 65 and on Medicare due to collecting SSDI for 24 months. When you turn 65, your penalties will reset.

How to Get Help with Medicare Late Enrollment Penalties

If you’re approaching your Medicare eligibility, give us a call or fill out our online request form. Let us help you navigate Medicare. We can help ensure you don’t end up with costly penalties.

by Lindsay Malzone, Lindsay Malzone is the Medicare expert for Medigap.com. She's been contributing to many well-known publications as an industry expert since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.