Late Enrollment Penalties
You may have to pay a late enrollment penalty (LEP) if you don’t enroll in certain Medicare coverage when you’re first eligible. These penalties are added to your monthly premiums and, in most cases, last for as long as you have that coverage. Understanding how late enrollment penalties work can help you avoid unexpected costs and make informed decisions about when to enroll. This article explains when the Medicare Part B and Part D penalties apply, how they’re calculated, and who may be exempt.
Part B Late Enrollment Penalty
If you don't sign up for Part B when you're first eligible, you'll usually pay an LEP for as long as you have Part B. Your monthly premium may go up 10% for each full 12-month period you could've had Part B but didn't enroll. Contact the Social Security Administration at 1-800-772-1213 (TTY: 1-800-325-0778) to find out if this penalty applies to you.
If you have creditable coverage through you or your spouse's current employer, you can delay enrolling in Part B without facing a penalty. You can sign up during the SEP, which lasts for eight months after your employment ends.
Part D Late Enrollment Penalty
You may have to pay a Part D LEP if you go 63 or more consecutive days without Medicare drug coverage or other creditable coverage after your Initial Enrollment Period ends. The penalty is added to your Part D premium for as long as you have Medicare drug coverage, even if you change plans. After you join a Medicare drug plan, the plan will tell you if you owe a penalty.
If you get Extra Help, you don’t pay an LEP. Extra Help is a Medicare program for people with limited income and resources that helps lower Medicare drug plan costs (like premiums, deductibles, and coinsurance).
How the Part D Penalty is Calculated
The Part D LEP is calculated by multiplying 1% of the national base beneficiary premium ($38.99 in 2026) times the number of full months you went without creditable drug coverage.
That amount is rounded to the nearest $.10 and added to your monthly premium. The national base beneficiary premium may go up each year, so your penalty amount may also go up each year.
For example, if you waited 10 months after you were eligible for Medicare to join a Medicare drug plan, and you didn’t have creditable drug coverage, you’ll have to pay a 10% late enrollment penalty in addition to your monthly plan premium.
Creditable Coverage
Prescription drug coverage is "creditable" when it is expected to pay, on average, at least as much as Medicare Part D. This could include drug coverage from a current or former employer or union, TRICARE, the Indian Health Service, or the Department of Veterans Affairs (VA). Employers and unions must notify you each year whether your coverage is creditable. Your current plan can also confirm this.
All Medicare plans we offer are considered creditable coverage.
Letter, Notice, or Certificate of Creditable Coverage
A letter (also called a notice or certificate) of creditable coverage contains information about who had coverage under the plan, and the dates the plan took effect and ended.
You may receive a letter of creditable coverage if you have prescription drug coverage from an employer, union, or other group health plan. Typically, you receive this letter each year in September. It tells you whether your group coverage is creditable. Keep the letter for future reference, as it may be required when enrolling in a Medicare drug plan, and requests are time sensitive. You may not be covered if you don't provide proof of creditable coverage.
If the letter states that your coverage isn’t creditable, please call us at 1-866-322-2824 (TTY: 711) for assistance.
If you didn‘t receive a letter, call your former insurer, employer, or union benefits center using the number on your insurance card or benefits materials.