Late Enrollment Penalty

This is a sum of money added to your monthly premium for a Prescription Drug Plan or for Medicare Part B if you don’t join as soon as you become eligible and don’t qualify for a Special Enrollment Period. This penalty is payable for the entire time you have Medicare, though there are a few exceptions.

The penalty for Part B is 10 percent of your monthly premium for every full 12-month period you did not sign up for Medicare Part B when you were eligible. So, if you waited 18 months, this is counted as one full 12-month period, which means you would be hit with a 10% penalty. However, if you wait 24 months, the penalty is 20 percent, 36 months is 30 percent, etc.

The penalty for delaying enrollment in Part D is a percentage of the base beneficiary premium, added to your monthly Plan D premium. The penalty is 1 percent for every month you delay enrollment. So, 1 month equals 1 percent, 2 months equals 2 percent. etc. The base beneficiary premium changes every year.

Susan did not enroll in a Medicare plan when she became eligible. She did not qualify for a late enrollment exception and is now paying a monthly premium penalty.