What Is the Medicare Part B Late Enrollment Penalty?

The Medicare Part B late enrollment penalty is a permanent premium surcharge added to your monthly Part B premium if you didn’t sign up for Part B when you were first eligible — and didn’t have a qualifying reason for the delay.

The penalty is 10% for every full 12-month period you were eligible for Part B but didn’t enroll.

And unlike most financial penalties, this one doesn’t go away. You pay it for as long as you have Medicare Part B.

How the Penalty Is Calculated

The penalty is straightforward to calculate:

Formula: Number of full 12-month periods without Part B × 10% = Penalty percentage added to your premium

Example:
You turned 65 in July 2022. You didn’t sign up for Part B and had no qualifying coverage. You finally enroll during the General Enrollment Period in early 2026 — about 3.5 years later.

• Full 12-month periods without Part B: 3
• Penalty: 3 × 10% = 30%
• 2026 standard Part B premium: $202.90/month
• Your monthly premium: $202.90 + 30% = $263.77/month
• Extra cost per year: roughly $729
• And it never goes away.

What Counts as a “Full 12-Month Period”?

Only complete 12-month stretches count. Partial years don’t add to the penalty — but they also don’t reduce it. The calculation always rounds down to the nearest whole year.

This is why the exact timing of enrollment matters. If you’re approaching the end of a 12-month period, enrolling before it completes saves you 10% permanently.

When Does the Penalty Not Apply?

You avoid the Part B penalty if:

You had qualifying employer coverage. If you were covered by a Group health plan based on your own or your spouse’s active employment at a company with 20 or more employees, you can delay Part B without penalty. You’ll have an 8-month Special Enrollment Period (SEP) once your coverage ends or employment ends, whichever is first.

You enrolled during an SEP. Signing up during a qualifying Special Enrollment Period avoids the penalty for the months you were covered by qualifying insurance.

Important: COBRA, retiree coverage, and marketplace insurance do not qualify as “active employer coverage” for SEP purposes. If your only coverage after 65 was COBRA, you likely accrued a penalty during that time.

The General Enrollment Period: Your Fallback Option

If you missed your Initial Enrollment Period and don’t qualify for an SEP, you can sign up during the General Enrollment Period (GEP): January 1 – March 31 each year. Coverage begins the following month.

Enrolling during the GEP typically triggers the Part B late enrollment penalty for however many full 12-month periods you went without coverage.

Can You Reduce or Eliminate the Penalty?

In most cases, no. Once you’ve accrued a Part B late enrollment penalty, it’s permanent. There are a few narrow exceptions:

• If you can prove you had qualifying coverage that Medicare didn’t properly credit, you can Appeal the penalty determination.
• If you were a victim of a natural disaster or other exceptional circumstance during your enrollment window, CMS has some discretion to waive the penalty.

These situations are rare. The most reliable way to avoid the penalty is to enroll on time or ensure you have documented qualifying coverage for every month of delay.

How the Penalty Interacts with IRMAA

If IRMAA applies to you (because your income exceeds the threshold), your penalty is calculated on top of the standard premium — not your IRMAA-adjusted premium. The penalty percentage is applied to the standard premium, then added to whatever your total premium is including any IRMAA surcharge.

Frequently Asked Questions

Is the Part B penalty really permanent?
Yes, in virtually all cases. The penalty stays with you for as long as you have Part B. There is no length of time after which it expires.

Does the penalty amount change if the Part B premium goes up?
Yes — the penalty is a percentage of the standard premium, so as the premium increases each year, your penalty amount also increases. A 30% penalty on $202.90 is about $61/month today. When the premium rises to $230, that same 30% penalty becomes $69/month.

I had marketplace (ACA) coverage after 65. Does that protect me from the penalty?
No. ACA marketplace coverage does not count as qualifying employer coverage for Medicare SEP purposes. Months covered only by marketplace insurance after becoming eligible for Medicare are subject to the penalty.

I was on my spouse’s employer plan. Does that count?
Yes — as long as the employer had 20 or more employees and your spouse was actively employed (not retired). Retiree coverage through a former employer does not count.

How do I know if I owe a penalty?
Medicare will notify you of any late enrollment penalty when you enroll. If you believe a penalty was applied in error — for example, if you had qualifying coverage that wasn’t recorded — you can appeal through Social Security.

I have a penalty. Should I still get Medigap?
Yes. Your Medigap Open Enrollment Period starts when you enroll in Part B, regardless of whether you have a penalty. During that 6-month window, insurers cannot deny you or charge extra for health conditions. Getting a Medigap plan still makes sense — your penalty increases the base Part B premium, but Medigap covers what Part B doesn’t, which is unchanged by the penalty.

Worried About a Penalty?

If you’re not sure whether you owe a Part B penalty or want to understand your enrollment options, we can help you work through it.

Schedule a free Medicare consultation with a REMEDIGAP advisor.