Miss This Medicare Deadline and You’ll Pay a Penalty for Life

Medicare’s Part B and Part D late-enrollment penalties are permanent surcharges that attach when someone eligible for Medicare fails to enroll on time without qualifying coverage during the gap. COBRA and retiree coverage do not protect against the Part B penalty, and the eight-month Special Enrollment Period that follows the end of active employer coverage runs independently of any COBRA election. Miss both the Initial Enrollment Period and the SEP, and you generally wait for the next General Enrollment Period to get Part B, with the surcharge applied for life.

This article is for anyone approaching 65, or already past it, who is still on an employer plan, retiree coverage, COBRA, or no coverage at all. If you enrolled in Part B on time, skip it. Everyone else faces a narrow set of dates that decides whether they pay a permanent Medicare surcharge for the rest of their lives.

The Deadline Most People Get Wrong

The Initial Enrollment Period is a seven-month window around your 65th birthday: the three months before the birthday month, the month itself, and the three months after. Part B and Part D penalties start accruing the moment that window closes, unless you qualify for a Special Enrollment Period.

The SEP exists only for people covered by a group health plan based on current active employment, their own or a spouse’s, at an employer with 20 or more employees. It runs for eight months after that employment or the group coverage ends, whichever comes first. COBRA, retiree coverage, and Affordable Care Act marketplace plans do not count as creditable coverage for Part B. So for someone whose employer coverage ended in January and who then spent 18 months on COBRA, the SEP clock started in January.

The fall Annual Enrollment Period, October 15 to December 7, only lets current enrollees change Medicare Advantage and Part D plans. The window that lets someone who missed the IEP and SEP enroll in Part B is the General Enrollment Period, January 1 through March 31, with coverage starting the month after enrollment. The penalty attaches then and stays.

What the Penalty Actually Costs

The Part B penalty adds 10% of the standard premium for every full 12-month period you were eligible but not enrolled, and it rides your premium for as long as you hold Part B, which for most people means life. CMS recalculates it each year against the current standard premium, so it climbs as premiums rise. A three-year delay locks in a 30% surcharge, hundreds of dollars a year on top of the standard premium and thousands over a decade, more as the premium keeps rising.

The Part D penalty runs on a monthly clock instead. It adds 1% of the national base beneficiary premium for every month you went without creditable drug coverage after your IEP closed. Two years without coverage produces a 24% surcharge on top of whatever plan you eventually pick. The dollar amount is smaller than the Part B penalty, but it follows the same rule: permanent, recalculated each year against the current base premium, and paid on top of the plan’s own premium.

The Traps Inside the Trap

Creditable coverage for Part D has a separate definition from creditable coverage for Part B. A retiree drug plan or a VA prescription benefit can count as creditable for Part D, sparing you that penalty, even though the same retiree coverage does nothing against the Part B penalty. Plans must send an annual creditable coverage notice, and keeping those notices matters, because the burden of proof later falls on you.

Working past 65 at a small employer carries its own risk. At employers with fewer than 20 employees, Medicare is generally the primary payer at 65, whatever the group plan says. Skip Part B there and you can end up paying out of pocket for what Medicare would have covered, and still accruing a penalty.

Medigap runs a parallel deadline. Its federal open enrollment period is the six-month window that begins once you are 65 and enrolled in Part B. During it, insurers cannot deny you or charge more based on health. Outside it, in most states, they can. A few states, including New York, Connecticut, Massachusetts, and Maine, offer broader continuous or annual guaranteed-issue rules. Everywhere else, missing the federal window can mean getting underwritten and rejected, which makes your Part B enrollment date the trigger for two separate countdowns.

What to Do

• If employer coverage based on current active employment is ending, enroll in Part B before the eight-month SEP closes. The clock starts the month after the job or the group coverage ends, whichever comes first, and COBRA does not extend it.
• If the IEP and SEP have already closed, file for Part B during the next General Enrollment Period, January 1 through March 31, and budget for the permanent 10%-per-year surcharge. Waiting another year only raises it.
• Keep every annual creditable coverage notice from an employer or retiree drug plan. When you enroll in Part D, those notices are what keep the 1%-per-month penalty off months you were actually covered.