Medicare Enrollment Periods and Late Penalties, Explained With Examples

Medicare enrollment mistakes are expensive and often permanent. Sign up late for Part B without a qualifying reason, and you may pay a higher premium for as long as you have Part B. Miss a drug coverage window, and a Part D penalty follows you too. Coverage can also be delayed by months, leaving a gap.

The rules are manageable once you see how the windows fit together.

The short version

• Initial Enrollment Period (IEP): seven months around your 65th birthday, starting three months before your birthday month and ending three months after.
• General Enrollment Period (GEP): January 1 to March 31 each year, for people who missed their IEP and don't qualify for a Special Enrollment Period. Coverage starts the month after you sign up.
• Special Enrollment Period (SEP): lets you delay Part B without penalty while you or your spouse are covered by an employer plan based on current employment, and sign up within eight months after that employment or coverage ends.
• Part B penalty: 10% for each full 12-month period you could have had Part B but didn't. It usually lasts as long as you have Part B.
• Part D penalty: 1% of the national base premium for each month without creditable drug coverage after your IEP, when the gap is 63 days or more. It lasts as long as you have Part D.
• COBRA and retiree coverage don't count as employment-based coverage for delaying Part B.

The Initial Enrollment Period

Coverage always starts on the first of a month. Signing up before your birthday month avoids a gap. Premium-free Part A generally starts the month you turn 65.

If you already receive Social Security benefits when you turn 65, you're usually enrolled in Parts A and B automatically. If not, you need to sign up through the Social Security Administration.

The General Enrollment Period

If you miss your IEP and don't qualify for a Special Enrollment Period, you can sign up during the GEP, January 1 to March 31. Coverage begins the month after you enroll. Late enrollment penalties may apply.

The Special Enrollment Period for employer coverage

If you or your spouse are still working and covered by a group health plan based on current employment, you can generally delay Part B without penalty. When the employment or coverage ends, whichever is first, you have eight months to sign up.

Key details:

• COBRA isn't employment-based coverage. Starting COBRA doesn't extend the eight-month window. Many people miss the window because they assume COBRA counts.
• Retiree coverage isn't current-employment coverage either.
• Marketplace coverage doesn't qualify for the SEP.
• Employer size affects whether Medicare or the employer plan pays first; see Medicare and employer coverage.

You'll usually need your employer to complete a form verifying your coverage when you sign up late.

The Part B penalty

Partial years don't count toward the penalty. Thirty months late is two full 12-month periods, so a 20% penalty.

Because the penalty is a percentage of the standard premium, it grows in dollars as premiums rise over time. For most people it lasts for life.

The Part D penalty

You may owe a Part D penalty if, after your IEP ends, you go 63 days or more in a row without Part D or other creditable drug coverage. Creditable coverage is drug coverage expected to pay at least as much as standard Part D, such as many employer plans. Your plan must tell you each year whether its coverage is creditable.

Example with a hypothetical $40 base premium and 26 months without coverage:

The base premium changes each year, so the dollar amount of the penalty changes too. It generally lasts as long as you have Part D. People who qualify for Extra Help generally don't pay the penalty.

The Part A penalty

Most people get premium-free Part A and won't face a Part A penalty. If you must buy Part A and enroll late, your Part A premium can be 10% higher for twice the number of years you could have had it but didn't sign up.

Other annual windows

• Annual Open Enrollment, October 15 to December 7: switch between Original Medicare and Medicare Advantage, change Medicare Advantage plans, or join, switch, or drop Part D plans. Changes start January 1.
• Medicare Advantage Open Enrollment, January 1 to March 31: people already in Medicare Advantage can switch to another Medicare Advantage plan or return to Original Medicare and join a Part D plan.
• Medigap open enrollment: a separate, one-time six-month window; see Medigap underwriting rules.

The takeaway

Know your Initial Enrollment Period, sign up early to avoid gaps, and if you delay Part B because of employer coverage, make sure it's based on current employment and sign up within eight months after it ends. Keep creditable drug coverage at all times. When in doubt, check with the Social Security Administration, Medicare, or your state's free SHIP counseling program before your windows close.

Sources

• Medicare.gov: When does Medicare coverage start?
• Medicare.gov: Avoid late enrollment penalties
• Medicare.gov: Part D late enrollment penalty fact sheet
• Medicare.gov: Enrolling in Part A and Part B (publication)
• SSA POMS: Premium increase for late enrollment