Avoiding the Medicare Part B Late Enrollment Penalty

When it comes to Medicare, timing is everything. Unless you have qualifying (creditable) employer group coverage, you generally need to enroll in Medicare at age 65. Some people qualify earlier due to disability or certain medical conditions. Missing key enrollment windows can trigger late enrollment penalties—especially for Medicare Part B, which adds costs to your monthly premium. This article focuses on Part B, with brief mentions of the other parts for context.

The Four Parts of Medicare (quick overview)

  • Part A – Hospital (Inpatient)

  • Part B – Medical (Outpatient, doctors, DME, some home health)

  • Part C – Medicare Advantage (private plans that bundle Part A/B and often Part D)

  • Part D – Prescription Drugs

Medicare Part A at a Glance

Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and inpatient rehabilitation.
Most people don’t pay a monthly premium for Part A if they (or a spouse) worked and paid Medicare taxes for at least 10 years (40 quarters). Because of that, Part A is rarely where penalties show up.

Medicare B: What It Covers and When to Enroll

Part B covers doctor services, outpatient care, some home health services, and durable medical equipment (DME).

Most people sign up for Part A and Part B when first eligible—typically at 65—unless they’re covered by qualifying employer group health insurance and can delay Part B without penalty.

Key Enrollment Windows for Part B

1) Initial Enrollment Period (IEP)

Your IEP is 7 months long:

  • Starts: 3 months before the month you turn 65

  • Includes: your birthday month

  • Ends: 3 months after your birthday month
    Example: If you turn 65 in May, your IEP runs February through August. Enrolling during your IEP avoids late penalties.

2) Special Enrollment Period (SEP) — If You Have Employer Group Coverage

You may delay Part B without penalty if you (or your spouse) are actively working and covered by a current employer group health plan from an employer with 20 or more employees. You can enroll:

  • Any time while you (or your spouse) are still working and covered by the group plan

  • Within 8 months after employment ends, even if the group coverage continues for a period

  • Within 8 months after the group coverage ends while employment continues

Coverage generally begins the month after you sign up (sometimes sooner or up to three months later, depending on circumstances).

When You Can Delay Medicare Part B (and Avoid a Penalty)

You can typically delay Part B if:

  • You have employer-sponsored health coverage through your own current job, or

  • Your spouse is actively working and you’re covered under their employer group plan, and

  • The employer has 20 or more employees

If any of the above is not true, you likely should enroll in Part B at 65 to avoid penalties.

The Part B Late Enrollment Penalty (LEP)

  • What it is: An added cost tacked onto your monthly Part B premium

  • How it’s calculated: 10% of the standard Part B premium for each full 12-month period you were eligible for Part B but didn’t enroll (and didn’t have qualifying employer coverage)

  • How long it lasts: You’ll usually pay the penalty for as long as you have Part B

How the Penalty Works (simple)

  • 10% per full year delayed beyond your eligible start

  • Added to your standard monthly Part B premium

  • Ongoing in most cases

Examples (With and Without a Penalty)

Sarah — Self-Employed, No Group Coverage

Sarah worked past 65 but was self-employed and did not have group coverage. She enrolled in Part B at 67, going 24 months without creditable coverage.
Result: Sarah owes a 20% penalty (10% × 2 full years) added to her monthly Part B premium, typically for as long as she has Part B.

Chad — Covered Under His Spouse’s Large Employer Plan

Chad turned 65 while covered under his wife Carla’s employer plan (the company has 100+ employees). He delayed Part B.
Three years later, Carla retires and the employer coverage ends. Chad enrolls in Part B to start the month after that coverage ends.
Result: No penalty, because his delay was protected by current employer group coverage from a large employer.

How to Avoid the Part B Penalty (Checklist)

  • Enroll during your IEP (the seven-month window around your 65th birthday)

  • Use your SEP if you (or your spouse) are actively working with 20+ employee group coverage; enroll within 8 months after the work or coverage ends

  • Act promptly once your job or group coverage ends—don’t let the 8-month SEP expire

  • If you miss both IEP and SEP, you may have to wait for the General Enrollment Period and could owe a penalty

If you missed your IEP and don’t qualify for an SEP, you can ask Social Security about any possible exceptions or relief that may apply to your situation. These are limited and evaluated case-by-case.