Medicare late enrollment penalties are fines imposed on eligible Medicare enrollees who delay enrollment in Medicare. The late enrollment penalty may be permanent and the enrollee will have to pay higher premiums for as long as they are enrolled in Medicare. The late enrollment fees help to encourage newly eligible individuals to enroll for Medicare on time. 

Part A

There are different late enrollment penalties for each of the Medicare plans. For Part A, most people are enrolled automatically and will have to pay no premium. However, those who have not paid enough Medicare taxes will most likely not be automatically enrolled and will pay a monthly premium. If this is the case, they will need to sign up during their Initial Enrollment Period. If they miss the Initial Enrollment Period, they will face late enrollment penalties. 

For Part A, the late enrollment penalty is an extra 10% of the cost of the premium. The beneficiary will pay this extra amount for twice the number of months or years they were eligible for Part A but failed to enroll. For example, suppose you were eligible to enroll in Part A for four years but chose not to enroll. In that case, you will have to pay the late enrollment penalty for a total of eight years.

Part B

To avoid the late enrollment penalty, newly eligible persons must also enroll for Part B during the Initial Enrollment Period. For those receiving Social Security or Railroad Retirement benefits, the Part B monthly premium will be deducted automatically from your monthly check. 

Suppose you fail to sign up for Part B during the Initial Enrollment Period and do not qualify for a Special Enrollment Period to delay your enrollment. In that case, you will pay a late enrollment penalty alongside your Part B monthly premium. This late enrollment penalty applies for the rest of the enrollee’s life, while the premium will increase by 10% for each year the enrollee failed to enroll for Part B while eligible. 

Part D

Part D’s eligibility period begins once you enroll for Medicare Part A and B during the Initial Enrollment Period. Of course, if you fail to enroll during this period, you will pay a late enrollment penalty that will be added to your monthly premium. This penalty is calculated by multiplying 1% of the national premium ($33.06 as of 2021) by the number of full months you did not have creditable coverage or Part D. This amount is then rounded to the nearest $0.10 and added to the premium.

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