Delaying Medicare enrollment can look, at first glance, like a simple way to save money while you're still covered by another plan. But if that other coverage doesn't qualify as "creditable" and you wait too long, Medicare can add a permanent surcharge to your Part B premium, your Part D premium, or both. This guide walks through exactly how those penalties are calculated, who actually has to pay them, what exceptions exist, and what to do if you already have one.
The Part B penalty: 10% for every 12 months
If you don't sign up for Part B when you're first eligible — and you don't qualify for a Special Enrollment Period because you have active employer coverage — Medicare can add 10% to your monthly Part B premium for each full 12-month period you could have enrolled but didn't.
This surcharge is calculated against the standard Part B premium in effect that year, not what you would have originally paid, and it generally applies for as long as you have Medicare. For example, someone who waited two full years after becoming eligible would pay a 20% surcharge on the standard monthly premium, every month, indefinitely.
The Part D penalty: 1% per month of the national average
The Part D penalty works differently. Medicare calculates 1% of the national average Part D premium for every full month you went without Part D or other creditable drug coverage after your Initial Enrollment Period, and that percentage is added to your monthly Part D premium.
Because the national average changes every year, the exact dollar amount of your surcharge also changes, even though the number of uncovered months used to calculate it stays fixed. Someone without drug coverage for 14 months, for example, would pay a 14% surcharge on the national average in effect each year, not on their specific plan's premium.
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Who actually has to pay these penalties
These penalties only apply to people who had a real opportunity to enroll and did not take it, without a valid reason to wait. If you are still working and have group health coverage through an employer with 20 or more employees (or coverage through a spouse's employer under those conditions), you can typically delay Part B without penalty while that coverage remains active.
The same applies to Part D if you have employer drug coverage that is equal to or better than standard Part D coverage, known as "creditable" coverage. The problem arises when someone assumes their coverage qualifies without confirming it, or loses that coverage and doesn't enroll in Medicare on time afterward.
Exceptions: creditable coverage and employer coverage
The most common exception is active coverage from an employer of sufficient size, for both Part B and Part D. When you lose that coverage or stop working, you get an eight-month Special Enrollment Period to sign up for Part B without a penalty, and a separate 63-day window for Part D.
Other forms of creditable coverage can include certain VA plans, TRICARE, or coverage through a union health plan, though the specific rules vary. Individual coverage purchased on the marketplace (not through an employer) generally does not count as creditable, which surprises many people who kept paying for a Marketplace plan after turning 65.
How to avoid the penalty from the start
The safest way to avoid any penalty is to enroll in Part B and Part D (or a Medicare Advantage plan with drug coverage) during your seven-month Initial Enrollment Period around your 65th birthday, unless you have written confirmation that your current coverage is creditable.
If you have employer coverage and plan to delay enrollment, keep the annual creditable coverage notice your plan sends you, and note the exact date that coverage ends so you can enroll within your Special Enrollment Period without accidentally missing the deadline.
What to do if you already have a penalty
If you already received a penalty notice, first check whether you had creditable coverage during that period that Medicare did not account for — if so, you can request a reconsideration by submitting documentation of that coverage. If the penalty is correct, it generally cannot be removed, but understanding it clearly helps you plan your budget and avoid surprises when comparing plans.
In some cases, switching to a Medicare Advantage plan with a low or $0 premium can help the overall impact of a Part D penalty feel less heavy on your monthly budget, even though the surcharge itself still applies. We can review your specific situation and honestly walk you through which options make sense for you.
A practical example of the combined calculation
Imagine someone who turned 65, had no employer coverage, and waited three full years before enrolling in Part B and Part D. For Part B, that means a 30% surcharge (10% for each of the three 12-month periods) on the standard premium in effect each year, indefinitely for as long as they have Medicare.
For Part D, if 36 full months passed without creditable drug coverage, the surcharge would be 36% of the national average Part D premium in effect each year, added on top of the premium for whatever plan they choose. These two surcharges are independent of each other — one is calculated against the standard Part B premium and the other against the national Part D average — and both are paid together every month once the person finally enrolls.
This example shows why waiting "just a little longer" can cost far more than it appears at first glance, especially since both surcharges accumulate month after month for as long as you have Medicare, not just for a limited period. That's why we always recommend confirming in writing, before delaying any enrollment, that your current coverage truly qualifies as creditable.
How this connects to enrollment dates and working past 65
This guide focuses specifically on how the penalties are calculated and avoided. If you need to review the exact dates of Medicare's different enrollment periods, see our 2026 enrollment dates guide. And if you're still working and unsure when to enroll, our guide to turning 65 while still working covers how to coordinate Medicare with your job-based coverage. This page, by contrast, focuses only on the calculation and exceptions of the penalties themselves.
A bilingual, local resource in Southern California
Karla Arámburo is a bilingual, licensed insurance agent serving Southern California, and reviewing whether you're at risk of a penalty, or how to handle one you already have, costs nothing and comes with no pressure to enroll. You can call or text (619) 321-8733, review our guide on Medicare Advantage vs. Original Medicare, our guide on Part D or explore our Medicare services. This page is general education, not individualized advice or an enrollment recommendation.
Frequently asked questions
Is the late enrollment penalty permanent?
For Part B, yes: as long as you have Medicare, you generally pay that surcharge every month. For Part D, the surcharge also typically lasts as long as you have Medicare drug coverage, though it is recalculated each year based on the current national average premium.
Can I appeal or remove a penalty that has already been assessed?
You can request a reconsideration if you believe the penalty was calculated incorrectly or if you had creditable coverage that Medicare did not account for. Providing evidence of that coverage, such as letters from your former employer plan, is key to that process.
Does Medi-Cal coverage count as creditable coverage?
Medi-Cal is not usually treated as creditable drug coverage for Part D penalty purposes the same way an employer plan is. If you have Medi-Cal and are approaching 65, it is worth reviewing your specific situation before delaying enrollment.
Does VA or TRICARE coverage avoid the penalty?
VA and TRICARE coverage can be considered creditable in certain cases, but the rules are specific and depend on your situation. We recommend verifying your particular case with documentation of your coverage before assuming you are protected.
What if I moved to the United States after turning 65?
If you became a Medicare-eligible resident after age 65, you generally get your own seven-month Initial Enrollment Period starting from that date, and you are typically not penalized for the time you lived outside the country without Medicare.
Does the Part B penalty also affect Medicare Advantage?
Yes. The Part B penalty is added to your monthly Part B premium, and since you need Part B to enroll in a Medicare Advantage plan, that surcharge still applies even though a plan administers your medical and hospital coverage.
How do I know if my employer coverage counts as creditable?
Your employer plan is required to send you an annual notice stating whether its drug coverage is "creditable" (equal to or better than standard Part D). Keep that notice, because Medicare may ask for it as proof if you enroll later.