The Part B late enrollment penalty
If you go without Part B (and without other creditable coverage) for 12 or more months after first eligible, your Part B premium is permanently increased by 10% for each full 12-month period of delay.
Example: standard 2026 Part B premium is $202.90/month. You delayed Part B for 5 years without creditable coverage. Penalty: 50% of $202.90 = $101.45/month penalty added forever. Lifetime cost over 20 years of retirement: $24,348.
The penalty is NOT a one-time fee. It's added to your monthly premium for as long as you have Part B. So a delay decision affects your retirement budget for decades.
Critical: 'creditable coverage' includes employer-sponsored coverage where you (or your spouse) is actively employed by an employer of 20+ people. COBRA, retiree plans, individual ACA plans, VA care, and TRICARE all have specific rules about what counts as creditable.
The Part D late enrollment penalty
Going without Part D coverage (and without creditable Rx coverage) for 63+ days after first eligible triggers a Part D penalty.
Penalty: 1% of the national base Part D premium per uncovered month. The 2026 national base premium is around $36.78/month. So a 12-month gap = ~$4.41/month penalty added. A 5-year gap = ~$22.07/month added.
It's smaller than the Part B penalty but still permanent. And it scales with the national base premium, so it grows over time.
The Medigap underwriting trap
This isn't a 'penalty' technically, but it's the most dangerous Medicare misstep for many people.
If you join Medicare Advantage at 65 and decide to switch to Original + Medigap years later, you're outside your 6-month Medigap Open Enrollment window. In most states, Medigap carriers can use medical underwriting at that point — review your health history, charge higher rates, or deny coverage entirely.
Health issues that can make you uninsurable for Medigap (in states without guaranteed issue): recent cancer (last 2-5 years), recent heart attack or stroke, current diabetes with complications, etc. The exact rules vary by carrier.
Practical implication: if you're not 100% sure you want Medicare Advantage, start with Original + Medigap during your initial OEP. You can always switch FROM Original + Medigap TO Medicare Advantage later (no underwriting). But going Medigap-direction later may not work.
Legitimate exceptions to the Part B penalty
Working past 65 with employer coverage (20+ employee employer): you (or your spouse) are actively employed and covered by group health. Penalty doesn't apply when you eventually enroll. You get an 8-month SEP after employment ends.
Disability or Medicare-secondary scenarios: certain situations where Medicare wasn't your primary or you weren't required to enroll.
Equitable Relief: if you can document that incorrect Medicare information from a federal employee or agency caused your delay, you can request equitable relief and have penalties waived. Rare and case-by-case, but it exists.
Volunteer service abroad: certain qualifying volunteer programs.
Returning from outside the U.S.: if you were living abroad and not eligible to enroll, you may qualify for an SEP on return — but this is narrow.
Working past 65 — the most common legitimate delay
If you (or your spouse) is actively working at age 65 for an employer of 20 or more people, AND you're covered by that employer's group health plan, you can defer Part B without penalty.
When the job ends or coverage ends: you have an 8-month Special Enrollment Period to enroll in Part B without penalty. Most people sign up the month before coverage ends to avoid any gap.
Important: COBRA does NOT count as creditable coverage for Part B (it counts for Part D). If you elect COBRA after retiring, your 8-month SEP for Part B started ticking when active employment ended — not when COBRA ends.
Form CMS-L564: when you enroll in Part B during the SEP, your former employer fills out this form attesting to your coverage dates. Required documentation.
What if you've truly missed everything
If you've gone years without Medicare, no employer coverage, and you're outside any SEP, you're stuck with: General Enrollment Period (Jan 1 – Mar 31, coverage Jul 1), plus the late-enrollment penalty.
This is often the result of bad advice from agents who suggested deferring Medicare without explaining the rules — or from people who assumed they didn't need it because they were healthy. The penalty is real and permanent.
If you're in this situation: enroll during the next GEP. Pay the penalty. The marginal cost of NOT enrolling now is even worse than what you've already done.