Medicare Part B Late Enrollment Penalty: How It Works

The Medicare Part B late enrollment penalty adds 10% to your Part B premium for each full 12-month period you could have had Part B but didn't sign up. It is added to your monthly premium, and for most people it lasts as long as they have Part B, which usually means for life. This guide explains how the penalty is figured, when it's safe to delay Part B because of job coverage, how the 8-month Special Enrollment Period works, and how to dispute a penalty you think is wrong.

Key takeaways

• The penalty is 10% for each full 12-month period without Part B. Partial periods don't count, and months in your Initial Enrollment Period never count.
• The percentage stays the same, but the dollar amount rises whenever the Part B premium rises.
• You may be able to delay Part B without a penalty if you or your spouse have group health coverage from a current job. Extra rules apply if you're on Medicare because of a disability. COBRA, retiree coverage, VA coverage, and Marketplace plans don't count.
• After the job or the coverage ends, whichever comes first, you have 8 months to sign up. COBRA doesn't extend that window.
• To dispute a penalty, follow the directions in your penalty letter and ask Social Security for reconsideration within 60 days.

How is the Part B late enrollment penalty calculated?

The rule is set in Section 1839(b) of the Social Security Act. Social Security adds 10% to your Part B premium for each full 12-month period you could have had Part B but didn't sign up.

A worked example

Medicare.gov gives this example. You wait 2 full years (24 months) to sign up, and you don't have a Special Enrollment Period. Your penalty is 20%, added to the standard Part B premium.

The standard premium changes every year, so we don't print it here. Check the current amount on Medicare.gov's "Avoid late enrollment penalties" page.

Do partial years count?

No. Only full 12-month periods count. If you sign up before the first full 12-month period ends, you don't pay a Part B penalty.

Which months does Social Security count?

For enrollments on or after January 1, 2023, Social Security counts the months after your Initial Enrollment Period ends, through the end of the month you enroll. Months inside your Initial Enrollment Period are never counted.

Some months are left out of the count. Starting in 1983, Social Security skips any month when you were 65 or older and had employer group health plan coverage through your own or your spouse's current employment.

Is it based on the IRMAA premium?

The penalty and the income-related premium (IRMAA) are separate charges. Medicare.gov's example adds the penalty percentage to the standard Part B premium. Our guide to Medicare IRMAA and how to appeal it covers the income-based amount.

How long does the Part B penalty last?

Late enrollment penalties are not a one-time late fee. They're added to your monthly premium and are usually charged for as long as you have Part B. For most people, that means for life.

Your penalty percentage stays the same over time. But because it's figured as a percentage of the premium, the dollar amount goes up whenever the Part B premium goes up.

There are a few exceptions, covered below: people on Medicare because of a disability whose penalty ends at 65, and people in a Medicare Savings Program.

When can you sign up for Part B?

For a month-by-month plan around your 65th birthday, see our turning 65 Medicare checklist. Our open enrollment dates guide lists other windows.

When is it safe to delay Part B?

If you or your spouse are still working and have group health insurance from that job, you can wait to sign up for Part B without a penalty. You can wait until the work or the coverage ends, whichever comes first.

If you're on Medicare because of a disability

The rule is stricter. The employer coverage must be large group health plan coverage. It must be based on your, your spouse's, or a family member's current employment.

If your employer has fewer than 20 employees

Medicare generally pays first when your employer has fewer than 20 employees. Ask the employer that provides your health insurance whether you need to sign up for Part A and Part B when you turn 65. Social Security tells you to ask your personnel office whether you have group health plan coverage.

If you're self-employed or have special coverage

If you're self-employed, or your coverage isn't offered to everyone at the company, Medicare.gov says to ask your insurer whether it counts as employer group health plan coverage as the IRS defines it. If it doesn't, sign up at 65 to avoid the penalty.

What coverage doesn't count for delaying Part B?

Social Security says these don't count as coverage based on current employment:

• COBRA
• Retiree health coverage
• Veterans Affairs (VA) coverage
• Individual coverage, such as a Health Insurance Marketplace plan

Medicare.gov also lists situations that don't qualify for a Special Enrollment Period: your COBRA or retiree coverage ends, you missed the 8-month window, you have or lose Marketplace coverage, or you have End-Stage Renal Disease (ESRD).

Say you retire at 66 and keep your old employer's plan through COBRA. Your 8-month window started when you stopped working, not when COBRA ends. Our guide to health insurance after losing a job compares COBRA with other options.

How does the 8-month Special Enrollment Period work?

The job-based Special Enrollment Period lets you sign up for Part B any time you have the coverage. It also lets you sign up within 8 months after the group health coverage or the job ends, whichever happens first.

Who qualifies

You must have had group health coverage through your or your spouse's current employment since the first month you were eligible for Part B. That coverage must not have ended more than 8 months ago.

When it starts

The Special Enrollment Period starts the month after your Initial Enrollment Period ends. You can't use it while you're still in your Initial Enrollment Period.

The 8-month clock starts when you stop working or lose the insurance, even if you then choose COBRA. Getting COBRA doesn't change when the window ends.

When your Part B coverage begins

• If you sign up while still covered, or during the first full month after the coverage ends, Part B can start the first day of the month you enroll or the first day of any of the next 3 months.
• If you sign up during the other 7 months, coverage starts the next month.

Medicare.gov suggests checking when your employer coverage ends and signing up about a month earlier to avoid a gap.

How do you apply for Part B with a Special Enrollment Period?

Form CMS-L564 (Request for Employment Information) is the proof of your job-based group health coverage.

1. Get Form CMS-L564. You fill out Section A. Your employer fills out Section B.
2. Cover the whole period. To use the Special Enrollment Period, you must have had group health coverage through your or your spouse's current employment since the first month you were eligible for Part B.
3. Gather other proof if your employer can't sign. If your employer can't complete Section B, fill it out as best you can yourself and send one form of secondary evidence, such as tax returns showing health premiums paid, W-2s showing pre-tax medical contributions, pay stubs with premium deductions, insurance cards with a policy effective date, explanations of benefits, or premium payment receipts. Social Security also accepts a letter, fax, or email from your employer or plan instead of a CMS-L564.
4. Choose how to apply. If you already have Part A, you can apply online at SSA.gov during the Special Enrollment Period at any time of year. Or send Form CMS-40B with the CMS-L564 to your local Social Security office by mail or fax.
5. Keep copies. Save everything you send and note the date.

What if your employer or plan gave you wrong information?

Medicare has exceptional conditions Special Enrollment Periods. You request one with Form CMS-10797. They cover cases such as:

• Wrong or misleading information from your health plan or employer
• Losing Medicaid
• A declared disaster or emergency
• Release from incarceration
• Other exceptional conditions

These apply to events on or after January 1, 2023. For most of these, the window lasts 6 months. The release-from-incarceration window is longer. If you enroll using an exceptional conditions Special Enrollment Period, there is no penalty. If you miss that window, the months without coverage count toward the penalty, including the Special Enrollment Period months.

Can a Medicare Savings Program or turning 65 end the penalty?

Medicare Savings Programs

Medicare.gov says that, generally, you won't pay a Part B penalty if you enroll in a Medicare Savings Program. States pay the Part B premium for people on the State buy-in rolls, and states never pay a late enrollment premium increase.

If you later leave the State buy-in rolls, Social Security treats you as if you had enrolled during your Initial Enrollment Period and stayed enrolled.

If you had a penalty before 65 because of a disability

If you paid a Part B penalty before 65, for example because you were on Medicare due to a disability, your premium goes back to the standard amount the month you turn 65. Months before 65 never count toward a penalty figured after 65.

How do you dispute a Part B penalty?

The SHIP National Technical Assistance Center says you appeal the Part B penalty with Social Security by following the directions in your penalty letter. You can ask to:

• Remove it, if you were continuously covered by Part B or job-based insurance.
• Lower it, if it was calculated wrong.

Not knowing about the enrollment rule is unlikely to succeed as an argument.

How to ask for reconsideration

Ask Social Security for reconsideration within 60 days of receiving the decision. You can:

1. Request it online as a non-medical request.
2. Upload Form SSA-561-U2.
3. Call 1-800-772-1213 (TTY 1-800-325-0778).

Send your proof of coverage, such as a CMS-L564 or the other records listed above.

How do the Part A and Part D penalties compare?

Our guide on how to compare Medicare Part D plans covers drug coverage.

Where can Texas residents get free help?

HICAP counseling

In Texas, the Health Information, Counseling and Advocacy Program (HICAP) offers free Medicare benefits counseling. Counselors help with enrollment, appeals, and Medicare Savings Programs. HICAP is a partnership of Texas Health and Human Services (HHSC), Texas Legal Services Center, and the Area Agencies on Aging. Call 800-252-9240.

Medicare Savings Programs in Texas

Texas HHS describes four Medicare Savings Programs: QMB, SLMB, QI-1, and QDWI. They help pay all or some of Medicare premiums, co-pays, and deductibles. Income and resource limits change every year, so check with Texas HHS for current limits. See our guide to Medicare Savings Programs in Texas for how to apply.

Common mistakes that lead to a penalty

• Waiting for COBRA to end. The 8-month window starts when the job or coverage ends, not when COBRA ends.
• Assuming retiree, VA, or Marketplace coverage counts. None of these is coverage based on current employment.
• Missing the 8-month window. After it closes, you may have to wait for the General Enrollment Period and pay a penalty.
• Not checking a small employer's rules. With fewer than 20 employees, Medicare generally pays first.
• Not keeping records. Pay stubs, W-2s, insurance cards, and premium receipts can prove your coverage if your employer can't sign the CMS-L564.
• Waiting to dispute a letter. You have 60 days from receiving the decision to ask for reconsideration.

What to do next

1. Write down when your Initial Enrollment Period ends and when your job or group coverage will end.
2. Ask your personnel office or insurer whether your coverage counts as group health plan coverage from current employment.
3. Start your Form CMS-L564 early and save your coverage records.
4. If you got a penalty letter you think is wrong, follow its directions and request reconsideration within 60 days.
5. For free, neutral counseling in Texas, call HICAP at 800-252-9240.

If you'd also like help from an agent, MeetBrokers is free to use. Every listed agent holds a state license that anyone can verify by National Producer Number. Our guide to what an NPN is shows how. Profiles marked "unclaimed" come from public licensing records. Browse licensed Medicare agents in Texas or Medicare agents in other states.

When you're ready, you can request help from a licensed Medicare agent in Texas. Your request goes only to the agent you choose. MeetBrokers is not connected with or endorsed by the U.S. government or the federal Medicare program.