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Medicare Part B Late Enrollment Penalty


If you are newly eligible for Original Medicare and do not enroll in Medicare Part B, you may have to pay the Medicare Part B penalty. The Medicare Part B penalty results in a higher premium every month you have Medicare Part B. Unfortunately, this penalty never goes away.

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What is the Penalty for Not Taking Medicare Part B?

The Medicare Part B penalty increases your monthly Medicare Part B premium by 10% for each full 12-month period you did not have creditable coverage. The penalty is based on the standard Medicare Part B premium, regardless of the premium amount you actually pay.

For example, if you pay a higher Medicare Part B premium based on your previous tax returns, your penalty will only be 10% of the base Medicare Part B premium. The penalty will not be 10% of your Income-Related Monthly Adjustment Amount premium.

For most, the Medicare Part B penalty never goes away. You must pay the additional premium cost as long as you have Medicare Part B. The only time the penalty goes away is if you are eligible for Medicare Part B prior to age 65 and pay the penalty before turning 65. Once you turn 65, the penalty is reset, and you will no longer be responsible for the additional premium.

How to Calculate Your Medicare Late Enrollment Penalties

Common Scenarios to Avoid Where the Medicare Part B Penalty May Apply

Once you are eligible for Original Medicare, it is important to know how to avoid additional costs. Penalties are an additional cost that no one plans for, and everyone hopes to avoid, especially when it comes to Medicare.

Here are some examples of scenarios to avoid if you do not want to pay the Medicare Part B Penalty:

  • You retire at 65 and continue retiree coverage until 70, then decide to enroll in Medicare Part B.
  • You lose employer coverage and wait longer than eight months to enroll in Medicare Part B
  • You do not have insurance coverage and wait until you are 67 to enroll in Original Medicare
  • You delay Medicare Part B coverage because of VA benefits past age 65

These scenarios are just a few examples of how you can be stuck paying the Medicare Part B penalty for life. If you avoid these scenarios or similar ones, you can avoid paying the Medicare Part B penalty altogether.

Is There a Cap on the Medicare Part B Penalty?

As of now, there is no cap when calculating the Medicare Part B late enrollment penalty. However, legislation has been introduced to cap the Medicare Part B penalty at 15% of the current premium, regardless of how many 12-month periods the beneficiary goes without coverage.

As of now, all legislation to reduce the penalty is under review and has not been passed. However, it would save thousands of beneficiaries from the high cost of the Medicare Part B penalty.

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How Can I Avoid the Medicare Part B Penalty?

One way to avoid the Medicare Part B Penalty is to enroll during your Initial Enrollment Period. If you’re turning 65, you can enroll in Medicare Part B during this enrollment period.

Your Initial Enrollment Period begins on the first day of the month, three months before you turn 65. It then lasts through your birth month and ends on the last day of the third month following your birth month. This means that if your 65th birthday is June 15, you can enroll between March 1 and September 30.

Suppose you do not enroll in Medicare Part B during your Initial Enrollment Period. In that case, you usually must wait for the General Enrollment Period before you can sign up unless you are eligible for a Special Enrollment Period. If so, your Special Enrollment Period may protect you from the late enrollment penalty.

General Enrollment runs from January 1 through March 31 each year. When you use this window to sign up for Medicare Part B, your coverage will be active on July 1. The General Enrollment Period is available to those who delayed Medicare benefits without creditable coverage.

Suppose your Initial Enrollment Period ended on November 30. If you wait to enroll until the General Election Period which starts January 1 the following year, you did not let an entire 12-month period go by before your Medicare Part B coverage was effective. Thus, you will avoid the Medicare Part B penalty.

Additionally, if you are approved for a Medicare Savings Program this will erase the Medicare Part B penalty even if you would otherwise be responsible for the additional premium. Keep in mind that to qualify for a Medicare Savings Program, you must meet specific income criteria. Not every beneficiary will qualify for this program.

When Does the Medicare Part B Penalty Apply?

The Medicare Part B penalty applies when you delay Medicare Part B benefits without creditable coverage.

The video below shows Bob who chose to delay his Medicare Part B enrollment. Shortly after Bob retired at 65, his wife fell ill. Due to her medical costs, Bob decided to delay his Medicare Part B coverage in order to help pay their medical bills. Little did he know, the longer he waited to enroll in Medicare Part B coverage, the more his Medicare Part B late enrollment penalty grew. Watch the video to see how things turn out for Bob.

When Does the Part B Penalty Not Apply?

Those who miss their initial enrollment deadline but sign up during the next General Enrollment Period will not pay the penalty if less than 12 months have passed. When you enroll during the General Enrollment Period, coverage goes into effect on July 1.

So, imagine your Initial Enrollment Period ends on November 30. If you do not enroll until the General Enrollment Period, only eight months will pass before your coverage becomes effective on July 1. Thus, the Part B penalty will not apply.

Also, those under 65 with Medicare who are paying a Medicare Part B penalty will not pay the penalty after 65. Further, those with Medicaid need not worry about Medicare Part B premiums and penalties because their state will cover those costs.

Finally, anyone who delayed Medicare Part B and did have creditable coverage can avoid the Medicare Part B penalty by qualifying for a Special Enrollment Period. Once you have a Special Enrollment Period, you have a set amount of time to enroll in Medicare Part B.

Enrolling during this time means you are not liable for late penalties. You may also qualify for equitable relief if a federal employee told you that you did not need to sign up for Medicare Part B when you were supposed to enroll.

What if I Don’t Sign Up for Medicare Part B Because I Have Other Health Insurance?

There are situations where you can keep your current health insurance. You can keep your plan if you have creditable coverage through your employer, spouse’s employer, or a union. You will not have to pay the penalty for delaying Medicare Part B coverage.

However, if your coverage is not creditable or you lose coverage (voluntarily or involuntarily), the clock begins to tick.

Usually, you will be able to sign up for Medicare Part B right away, during a Special Enrollment Period. This is an eight-month window beginning when your employer coverage ends. If you do not enroll during this period, you will have to pay the Medicare Part B penalty. You will pay a 10% premium increase for each full 12 months you wait beyond the date the Special Enrollment Period began.

If you retire before age 65 and choose to extend your coverage using COBRA, you must end COBRA coverage once you are eligible for Medicare. COBRA is not creditable coverage to avoid the Medicare Part B penalty.

How Do I Appeal the Medicare Part B Penalty?

If you feel that the Medicare Part B penalty should not apply, you may request a review. Medicare has reconsideration request forms to file an appeal.

Unfortunately, you will still pay the Medicare Part B penalty while waiting for your appeal to process. Additionally, there is no timeline by which Medicare must abide when processing your appeal.

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How to Avoid the Medicare Part B Late Enrollment Penalty

The best way to avoid the Medicare Part B penalty is to plan ahead. You have several Medicare options from which to choose, including Medicare Advantage or a Medicare Supplement plan.

MedicareFAQ can help you through these decisions by answering your questions and helping you prepare for your new coverage. Call the number above or fill out our online rate form to see all the options available in your area.

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Sources:

MedicareFAQ is dedicated to providing you with authentic and trustworthy Medicare information. We have strict sourcing guidelines and work diligently to serve our readers with accurate and up-to-date content.

  1. Part B Late Enrollment Penalty, Medicare. Accessed April 2022.
    https://www.medicare.gov/your-medicare-costs/part-b-costs/part-b-late-enrollment-penalty
  2. General Medicare Information, KFF. Accessed April 2022.
    https://www.kff.org/faqs/medicare-open-enrollment-faqs/i-didnt-sign-up-for-part-b-when-i-first-became-eligible-but-want-to-sign-up-now-i-know-there-is-a-penalty-for-late-enrollment-is-there-any-way-to-avoid-the-penalty/
  3. Enroll in Part B, CMS . Accessed April 2022.
    https://www.cms.gov/Outreach-and-Education/Find-Your-Provider-Type/Employers-and-Unions/FS3-Enroll-in-Part-A-and-B.pdf

Jagger Esch

Jagger Esch is the Medicare expert for MedicareFAQ and the founder, president, and CEO of Elite Insurance Partners and MedicareFAQ.com. Since the inception of his first company in 2012, he has been dedicated to helping those eligible for Medicare by providing them with resources to educate themselves on all their Medicare options. He is featured in many publications as well as writes regularly for other expert columns regarding Medicare.

102 thoughts on “Medicare Part B Late Enrollment Penalty

  1. My husband has BCBS Federal Insurance and I am also on his medical Insurance. He retired at age 45 and is now 73, I am 72. We kept his government Insurance and never applied for Medicare part B. We plan to keep his Government Insurance but wanted to know what the penalty would be after 8 yrs if we enrolled in Medicare part B at this time.

    1. Hi Bonnie! If you turned 65 8 years ago, and you delayed signing up for Part B until now, your monthly premium would be 80% higher for as long as you have Medicare (8 years x 10%). However, you should not incur a penalty if you’ve had BCBS Federal Insurance. When he retired, you both were enrolled in Part A & Part B. That became your primary coverage, then BCBS became secondary.

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