How the Penalty Works
According to Medicare & You 2026, if you don't sign up for Part B when you're first eligible, your monthly Part B premium may go up 10% for each full 12-month period in which you were eligible for Part B but didn't sign up. This penalty is added to your premium for as long as you have Part B — which, for most people, means for the rest of their life.
Unlike some financial penalties that expire or decrease over time, the Part B late enrollment penalty never goes away. Every month you have Part B, you're paying that extra percentage. Over 20 or 30 years of retirement, even a 20% penalty adds up to thousands of dollars.
Real Example — From Medicare & You 2026
Medicare's official handbook gives this example to illustrate how the penalty is calculated:
In 2026, with a standard premium of $202.90, a 20% penalty would mean paying an extra $40.58 per month — or about $487 more per year — for as long as you have Part B. Over 20 years, that's nearly $10,000 in unnecessary costs.
When Does the Clock Start?
Your Initial Enrollment Period (IEP) is a 7-month window around your 65th birthday — 3 months before, the month of, and 3 months after. If you don't sign up during your IEP (and you don't have qualifying employer coverage that allows you to delay), the penalty clock starts running from the end of your IEP.
The penalty is calculated based on how many full 12-month periods passed between the end of your IEP and when you actually enrolled. Partial years don't count, but the rounding doesn't help you much — even 13 months without Part B means a 10% penalty.
How to Avoid the Penalty
The penalty applies when you miss your enrollment window without a qualifying reason. There are legitimate ways to delay Part B without a penalty:
- ✅Active employer coverage: If you or your spouse are still working and covered under a group health plan from an employer with 20 or more employees, you can delay Part B. You'll qualify for a Special Enrollment Period to sign up within 8 months of when that employment or coverage ends — whichever comes first.
- ✅Medicare Savings Program: If you enroll in a Medicare Savings Program, you may not have to pay a late enrollment penalty even if you missed your original window.
- ❌COBRA does NOT protect you: COBRA is not considered active employer coverage. If you retire and go on COBRA, your 8-month SEP clock starts from the day your employment ended — not when COBRA runs out. Many people miss Part B because they thought COBRA protected them. It does not.
- ❌Marketplace coverage does NOT protect you: Having an ACA Marketplace plan also does not qualify you for a Special Enrollment Period or protect you from the penalty.
- ❌Retiree coverage does NOT protect you: Coverage from a former employer (retiree health benefits) is not the same as active employer coverage for this purpose.
If you missed your IEP and don't qualify for a Special Enrollment Period, you can sign up during the General Enrollment Period (January 1 – March 31 each year). Your coverage won't start until the first day of the month after you sign up — meaning if you enroll in January, coverage doesn't begin until February. And you'll likely owe the late enrollment penalty on top of it.
Can the Penalty Be Waived?
In most cases, no. The penalty is applied based on the enrollment rules and there is no formal appeal process for it the way there is for IRMAA. However, there are limited exceptional circumstances — such as being impacted by a natural disaster, incarceration, employer or health plan error, or losing Medicaid coverage — where Medicare may allow you to sign up during a Special Enrollment Period without a penalty. Contact Social Security or call 1-800-MEDICARE to find out if your circumstances qualify.
"I've had clients come to me after they've already incurred a Part B penalty — sometimes years of it — before anyone explained what happened. The COBRA situation is the most common cause. People retire, go on COBRA for 18 months, and when COBRA ends they sign up for Medicare. But their 8-month SEP window closed 10 months earlier. Now they have a 10% penalty for life. Please call me before you retire. This is a 15-minute conversation that can save you thousands of dollars."
Talk to Betsy — Free ConsultationIf You Think You've Already Incurred a Penalty
If you're currently enrolled in Part B and think you may be paying a penalty, your Medicare Summary Notice (MSN) or your Medicare card materials will reflect what you're being charged. You can also log in to your Medicare account at Medicare.gov or call 1-800-MEDICARE to ask about your premium breakdown. If you believe the penalty was applied in error — for example, you had employer coverage during the period in question — contact Social Security and provide documentation of your prior coverage.