The Medicare Part B late enrollment penalty rule people overlook

The late enrollment penalty adds 10% to your Part B premium for every full year you could have had coverage and didn’t. At the 2026 standard premium of $202.90, two years late costs an extra $40.58 every month, for as long as you keep Part B.

Find your situation first:

• Already penalized? Section 3 shows which months Social Security actually counts. Section 6 explains why your figure may be wrong.
• Turning 65 soon? Sections 4 and 5 cover the only coverage that lets you delay safely, and the forms that prove it.

Part B is one of the five separate bills that make up Medicare, and it is the only one that carries a permanent surcharge for signing up late.

ℹ️ Financial Disclaimer: This article is educational and not personalized advice on insurance selection, tax planning, lending or credit, investments, or debt relief. Medicare enrollment decisions depend on your specific coverage, employer, and income. Consult a State Health Insurance Assistance Program counselor, a fiduciary advisor, a CPA, or a qualified attorney before acting.

How much the Part B penalty actually costs in 2026

The penalty is 10% of the standard monthly Part B premium for each full 12-month period you could have signed up and didn’t. Partial years never count.

🔍 How It Works: Multiply the standard premium by 10% for each completed year of delay, then add that to the premium. Two years of delay is 20% of $202.90, or $40.58, giving a monthly bill of $243.48 — which Medicare rounds to $243.50.

Penalty amounts calculated by FinanceAuthorityHub from the standard premium published by CMS in its 2026 Medicare Parts A & B premiums fact sheet, which set the 2026 standard premium at $202.90, up from $185.00 in 2025. Amounts are rounded to the nearest dime.

The percentage is fixed, but the dollar figure is not. Your penalty is recalculated every year against the new standard premium, so it rises whenever the standard Part B premium rises — which it did by nearly 10% this year.

That matters over a retirement. A $40.58 monthly surcharge is under $500 a year, but run it through a compounding calculator over 20 years and the picture changes considerably.

Which months Medicare actually counts

Most people assume the clock starts at their 65th birthday. It doesn’t, and the difference is often a full 10%.

Social Security’s manual counts every month after your Initial Enrollment Period ends, through the end of the enrollment period in which you finally signed up. Months inside your Initial Enrollment Period are never counted.

🔍 How It Works: Your Initial Enrollment Period is seven months — three before your birthday month, the birthday month, and three after. Say it closed in April 2017 and you enrolled during the 2019 General Enrollment Period, which ran to March 31. The countable window is May 2017 through March 2019: 23 months, which is one completed 12-month period, not two. The penalty is 10%, not 20%.

💡 Expert Note: Because the count runs through the close of the General Enrollment Period, enrolling on January 2 and enrolling on March 30 of the same year produce an identical penalty. Social Security’s operating manual sets out the counting rule and also specifies that premium amounts are rounded to the nearest dime.

One more distinction worth getting right: the penalty percentage applies to the base premium, not to an income-adjusted one. Higher earners in the IRMAA income tiers pay the base premium, their IRMAA amount, and the penalty as three separate, stacked charges.

When you can delay Part B without a penalty

One condition protects you: group health plan coverage based on current employment, yours or your spouse’s, at an employer with 20 or more employees. Nothing else does.

The employee count decides who pays first. At 20 or more, the group plan is primary and Medicare is secondary, so delaying is penalty-free. Below 20, Medicare Secondary Payer rules make Medicare primary at 65, and the group plan pays only what it would have paid second.

⚠️ Costly Mistake: COBRA and retiree coverage are not coverage based on current employment. Neither one stops the penalty clock or extends your enrollment window, and people still working at 65 who switch to COBRA at retirement routinely discover this months too late. Marketplace plans and VA coverage do not protect you either.

There is a second trap for anyone delaying while employed: HSA contributions have to stop before Medicare coverage starts, and Part A enrollment can be backdated up to six months. Couples should also check what a married couple actually pays for Medicare before assuming a spouse’s plan is the cheaper route.

✅ Action Step: Ask your employer’s benefits administrator two questions in writing: “Is our group plan primary or secondary for employees aged 65 and over?” and “Does this plan meet the 20-employee test for the current and preceding year?” Get the answer on paper — misinformation from an employer, unlike misinformation from a federal employee, gives you no route to relief later.

How to use the Special Enrollment Period

Your Special Enrollment Period runs while you are still working, or for eight months after employment or group coverage ends — whichever comes first. Not whichever you prefer.

Two forms do the work. CMS-40B is your Part B application. Form CMS-L564 is the Request for Employment Information your employer completes to prove the coverage; you fill in Section A, your employer signs Section B. If the employer has closed or refuses, the form’s instructions allow alternative proof, so file anyway rather than missing the window.

Miss the eight months and you wait for the General Enrollment Period, January 1 through March 31, with coverage starting the month after you sign up. Anyone recently retired should start applying through Social Security before the last paycheck, not after.

✅ Action Step: Call Social Security at 1-800-772-1213 and ask: “What date do you have on file as the end of my Initial Enrollment Period, and how many months are currently counted toward my penalty?” Write the answer down with the date and the representative’s name.

Your penalty might not be correct

The Inspector General at Social Security audited this exact process and published the results in March 2026. The findings are worth knowing before you accept the number on your notice.

📊 Data Point: Of 200 randomly sampled beneficiaries penalized after enrolling in the 2023 or 2024 General Enrollment Periods, 23 had their applications processed inaccurately — projecting to roughly 12,000 people and about $12 million improperly assessed, most of it charged when it should not have been. Source: SSA Office of the Inspector General, audit report 072402, March 2026. Projections are at 90% confidence.

The causes were mundane: group health plan coverage never entered into the system, residency dates that shifted the Initial Enrollment Period, and exceptional-conditions enrollments processed as ordinary late ones. None of the 200 notices reviewed showed the percentage, the dollar amount, or the months counted.

✅ Action Step: You can request a reconsideration of the determination, and you can request a penalty reduction at any time by giving Social Security evidence of group coverage months that were never credited. There is no deadline on the reduction request. The process resembles appealing an IRMAA determination with Form SSA-44, though it uses a different route.

Three routes that can end the penalty

“For life” is the default, not the rule. Medicare’s own guidance names two situations where no Part B penalty applies: qualifying for a Special Enrollment Period, or enrolling in a Medicare Savings Program.

The savings-program route is the one most often missed. Under state buy-in agreements the state does not pay your penalty, and that relief passes to you — and if you later leave the program you are treated as though you had enrolled on time. Eligibility depends on limited income and resources, with limits set by your state, several of which sit above the federal minimums.

Equitable relief is narrower. It covers late enrollment caused by an error or misinformation from a federal employee, not from an employer or an insurance agent. There is no deadline to ask, but no formal appeal if refused.

Note that the penalty follows you into Medicare Advantage plans, since those require Part B. Switching plans does not shed it.

✅ Action Step: Contact your state Medicaid office or a free SHIP counselor and ask: “Do I qualify for QMB, SLMB, or QI in this state, and would enrolling remove the Part B late enrollment penalty from my premium?”

Common questions about the Part B late enrollment penalty

What to do next

If you are approaching 65, confirm your employer’s size in writing this month — that single answer determines whether delaying is safe.

If you have already been penalized, call Social Security and ask for the months counted, then check your Medicare Savings Program eligibility before anything else. SHIP counseling is free and sells nothing. You can also model the cost against your retirement income to see what it changes.

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