A man retires at 65 with a comfortable nest egg, keeps his employer health plan through COBRA because the coverage is familiar and generous, and lets the 18 months run out. He then applies for Medicare Part B and gets a letter with a premium noticeably higher than the standard rate, and a note that the surcharge stays on his bill for life.
This is the Part B late-enrollment penalty. It is separate from IRMAA, stacks on top of IRMAA, and unlike almost every other Medicare cost, it is permanent.
Why COBRA Is the Villain Here
Only health insurance tied to active, current employment lets you delay Part B without penalty. COBRA is continuation coverage from a job you no longer hold, so Medicare does not treat it as creditable for Part B purposes. Retiree coverage and severance-linked health benefits fall into the same bucket. They may feel like employer coverage, but they do not protect the enrollment window.
The Special Enrollment Period is an 8-month clock that starts the month employment ends or employer group coverage ends, whichever comes first. Electing COBRA does not pause it. Miss that window and you wait for the General Enrollment Period, sit through a coverage gap, and then start paying the penalty.
The Part B penalty is 10% of the standard premium for each full 12-month period you could have had Part B and did not. The standard 2026 Part B premium is $203 a month, up from $185 in 2025. A one-year delay adds roughly 10% to that base. A two-year delay adds roughly 20%. The surcharge is recalculated every year as the standard premium rises, so it grows with the program.
For our 67-year-old, an 18-month delay rounds down to one full 12-month period of penalty, adding roughly $20 a month on today’s premium. Over a 20-plus year retirement, with the base premium climbing each year, the cumulative cost runs into the thousands. It stacks on top of any IRMAA surcharge his income triggers, which for higher earners can push the total Part B bill past $400 or $600 a month before the penalty is even added.
The 2027 Social Security COLA is tracking around 3.1%, while Part B premiums jumped by nearly 10% year over year into 2026. Medicare inflation is outrunning the benefit checks that pay for it, making a permanent surcharge sting more each year.
Drug coverage has its own penalty. If you go 63 or more days without Part D or other creditable drug coverage after becoming eligible, Medicare adds roughly 1% of the national base beneficiary premium for each month you were uncovered. It is also permanent and recalculated each year as the national base premium changes. COBRA drug coverage is often creditable, but not always. The plan is required to send you a Notice of Creditable Coverage each year. Keep those letters.
Who Can Actually Delay Part B Safely
Readers still working past 65 with true active-employment group coverage at an employer with 20 or more employees can delay Part B. When they retire, the 8-month Special Enrollment Period begins and they can enroll without penalty.
The wrinkles that catch people:
- Small employers. At companies with fewer than 20 employees, Medicare typically becomes the primary payer at 65.
- Self-employment. There is no employer plan protecting you. Enroll at 65.
- COBRA and retiree plans. Not creditable for Part B.
- Part A. Premium-free for roughly 99% of beneficiaries, so there is rarely a reason to delay it. Enroll at 65 unless you are actively contributing to an HSA.
If You Are Already Late
Enroll at the next General Enrollment Period, which runs January 1 through March 31, with coverage starting the month after you sign up. Then ask about equitable relief. If a federal employee, employer, or plan administrator gave you incorrect information about when to enroll, Social Security can waive or reduce the penalty. Put the request in writing, attach any documentation you have, and be specific about who told you what.
Two Things to Do This Week
First, if you are approaching 65 and considering COBRA, severance health coverage, or a retiree plan as your bridge, enroll in Part B anyway. The premium is real money, but a permanent surcharge is worse. Second, if you have already missed the window, do not wait for the letter to arrive. File for the next General Enrollment Period and start the equitable relief conversation if applicable.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks