Key Takeaways

• Delaying Medicare Part B enrollment without qualifying coverage triggers a lifetime late enrollment penalty.

• The penalty increases the longer you wait and is calculated based on the standard Part B premium for each 12-month delay.

Why Some People Skip Medicare Part B

If you’re approaching age 65 and still working, you might assume you don’t need Medicare Part B right away. This part of Medicare helps cover outpatient services, doctor visits, and preventive care. Since it comes with a monthly premium, skipping it might seem like a smart way to avoid extra costs—especially if you’re already covered by an employer health plan. But that decision can come back to haunt you.

You must carefully consider whether your current insurance qualifies as creditable coverage by Medicare standards. If it doesn’t, you could face steep penalties that last for the rest of your life.

What Is the Part B Late Enrollment Penalty?

The late enrollment penalty is a permanent increase in your Medicare Part B monthly premium. It applies if:

• You didn’t sign up for Part B when you were first eligible (usually at age 65), and

• You weren’t covered by creditable employer group health insurance during the time you delayed.

In 2025, the standard Part B premium is $185. If you delayed enrollment for one full year without creditable coverage, you would pay an additional 10% of this standard premium—permanently. For example, if you delayed for three years, that’s a 30% increase on your premium every month for as long as you have Medicare.

Initial Enrollment Period (IEP): Your First Chance to Avoid the Penalty

The IEP is your first and most important opportunity to enroll in Medicare Part B without penalty. It starts three months before you turn 65, includes the month of your 65th birthday, and continues for three months after.

If you enroll during the first three months, your coverage starts the month you turn 65. Waiting until the last part of your IEP means coverage starts later—and delaying beyond that without qualified group health insurance triggers the penalty.

Creditable Coverage: The Key to Penalty Protection

To avoid the penalty, your employer coverage must meet Medicare’s definition of creditable. Here’s what qualifies:

• It must be based on current employment, not retiree or COBRA coverage.

• The employer should have 20 or more employees if you’re enrolling in Medicare based on age.

• The plan must provide coverage that is at least as good as Medicare Part B.

Small employer coverage or coverage through a spouse’s plan with a small company may not qualify. Always verify with your employer’s HR department.

Special Enrollment Period (SEP): Your Safety Net—If You Qualify

If you delay Medicare Part B because you have creditable coverage from your (or your spouse’s) current employer, you may qualify for a Special Enrollment Period. This SEP allows you to enroll in Part B without penalty:

• Any time you’re still covered by that group health plan.

• For up to 8 months after the coverage ends or your employment ends—whichever comes first.

If you miss this SEP, your only other opportunity to enroll is during the General Enrollment Period (January 1 – March 31), and you’ll pay the late penalty.

General Enrollment Period (GEP): Your Backup, with Penalty

If you don’t enroll in Part B during your IEP or SEP, you must wait for the General Enrollment Period. This runs from January 1 to March 31 each year, with coverage beginning July 1 of the same year.

Enrollment during this window almost always comes with a penalty—unless you had creditable coverage. That means a late start and higher monthly premiums for the rest of your life.

How the Penalty Adds Up Over Time

The penalty is calculated based on the number of full 12-month periods you went without Part B while eligible and without creditable coverage. The penalty is 10% of the standard premium for each year you delayed.

Here’s how it grows:

• 1 year late: 10% penalty = $18.50 more per month

• 2 years late: 20% penalty = $37.00 more per month

• 3 years late: 30% penalty = $55.50 more per month

These increases are tied to the standard premium, which typically rises each year. So, the dollar amount of your penalty will also increase over time.

Retiree Coverage and COBRA Don’t Count

It’s a common mistake to assume that retiree coverage or COBRA is a valid substitute for Medicare Part B. Unfortunately, Medicare doesn’t consider either of these options as creditable for Part B.

That means:

• Delaying Part B while on retiree coverage will result in a penalty.

• COBRA does not delay your enrollment window for Part B.

You still need to enroll during your IEP or qualify for a SEP through current employment-based coverage to avoid penalties.

What About TRICARE or VA Coverage?

Veterans or military retirees may be covered under TRICARE or VA healthcare benefits. These are valuable programs, but they do not exempt you from enrolling in Medicare Part B:

• TRICARE requires enrollment in Part B to maintain full TRICARE benefits once you turn 65.

• VA benefits do not count as creditable coverage for Part B.

Skipping Part B in these scenarios can disrupt your access to care and trigger penalties.

Medicare Part B Premiums Aren’t Fixed Forever

Even if you enroll late and start paying the penalty, your premium isn’t static. Each year, Medicare adjusts the standard Part B premium based on healthcare spending. That means the penalty amount you pay—being a percentage of the standard premium—also increases with time.

In short, the longer you wait to enroll, the more you’ll pay, and that cost grows over the years.

Income May Raise Your Premium Even More

Another factor that could increase your Part B premium is your income. Medicare uses your Modified Adjusted Gross Income (MAGI) from your tax return two years prior to determine if you owe an Income-Related Monthly Adjustment Amount (IRMAA).

If your income exceeds certain thresholds, your premium could be significantly higher than the standard amount—plus the late penalty on top of that.

In 2025, the income threshold begins at $106,000 for individuals and $212,000 for joint filers. Crossing those lines can mean hundreds more per month.

How to Avoid the Pitfall

Here’s what you can do to protect yourself from the Part B penalty:

• Understand your Initial Enrollment Period and mark your calendar.

• Confirm with your employer that your current coverage qualifies as creditable.

• Enroll on time if you’re not covered by a qualifying plan.

• Use your Special Enrollment Period if you’re leaving a job with creditable coverage.

• Don’t rely on COBRA or retiree coverage to delay enrollment.

Being proactive and asking the right questions can save you thousands over your retirement years.

What If You Already Have a Penalty?

If you’ve already enrolled late and are paying the penalty, unfortunately, there is no option to appeal or remove it unless it was applied in error. It’s a permanent addition to your premium.

However, if you believe your delay was covered by creditable insurance and you were incorrectly penalized, you can contact Medicare and file a request for reconsideration.

This One Choice Can Shape Your Healthcare Costs for Life

Delaying Medicare Part B might seem like a budget-friendly decision while you’re still working, but the consequences can be lasting and expensive. With limited enrollment windows and strict rules about creditable coverage, skipping Part B without understanding the rules leads to lifelong penalties.

If you’re approaching age 65 or considering postponing enrollment, now is the time to evaluate your situation and make a well-informed decision.

To make sure you choose the right path, speak with a licensed agent listed on this website for personalized guidance tailored to your employment status and health coverage.