How Long Does the Medicare Part B Penalty Last?

The Part B late enrollment penalty will last the rest of your life, and it can quickly become a major expense. The cost of your premium will rise by 10% for every 12-month period that you are not enrolled in Medicare.

Once you have enrolled, the increase applies every month that you pay your premium. Even if you were to wait just two years, the change could be dramatic.

The Part B premium for 2023 is $164.90. Waiting two years would increase it by 20% to $197.88 — an extra $32.98 per month. So, over the course of a year, you would end up paying almost $400 more for Part B coverage than a beneficiary who enrolled on time would pay.

One of the few ways to avoid the penalty other than signing up on time would be if you qualified to enroll during a special enrollment period.

As of now, there is no cap on your Medicare penalties. This means that your costs will continue to rise the longer you wait to enroll after you are eligible, no matter how long that period is.

Medicare Part B Penalty

There is no cap on the Part B penalty, and this can be damaging to your finances in retirement given the rate at which it rises. Within 10 years of waiting, your Part B monthly costs will have doubled due to the penalty.

There is typically no way out of paying the penalty once you have met the requirements for it. As long as you have Medicare, you will be paying more than other beneficiaries.

Medicare Part D Penalty

Part D prescription drug plans, which are sold by private insurers, also come with a late enrollment penalty if you don’t enroll when first eligible. But it is a bit more complex than the Part B penalty.

According to the U.S. Centers for Medicare & Medicaid Services, you will owe a Part D penalty if you go 63 or more days in a row without drug coverage at any point after you were first eligible to enroll.

Your penalty is determined by taking the national base beneficiary premium (essentially the average premium price across the country) and multiplying 1% of it by the number of months that you didn’t have coverage.

There are some situations where you can have other types of coverage and avoid the penalty, like if you have creditable prescription drug coverage that covers at least the same things a Part D plan would.

Calculating your Part B penalty is fairly straightforward. You simply add 10% to the cost of your monthly premium for each year-long period you didn’t have Medicare. It’s simple to get a snapshot of what you will have to pay each month.

To calculate your Part D penalty, you will need to know what the national base beneficiary premium is. You then take 1% of that figure and multiply it by the number of full months that you didn’t have drug coverage.

The number you get will be the penalty that is added onto your premium.

When you first become eligible for Medicare, it is very important that you enroll on time. Since late enrollment penalties have no cap and last the rest of your life, they can quickly become major expenses for you.

For Part D plans, your penalty can fluctuate year-to-year even after you have coverage since the base beneficiary premium can change.

Many Americans retire expecting to spend a certain amount on health care. Penalties can increase that number dramatically and alter the standard of living you were hoping to achieve in retirement.

For most Americans, it makes sense to switch over to Medicare once they become eligible. Remember that the decision to wait and be penalized typically cannot be undone. Once your premiums have risen due to penalties, they will not come back down.