Medicare Enrollment Mistakes Can Lead to Permanent Penalties

Missing deadlines is almost never a good thing, and that’s especially true when it comes to Medicare, the federal health insurance program for retirees. Nearly 70 million Americans are enrolled already, and about 4.1 million are expected to turn 65 this year and become eligible. As you approach this milestone, it’s important to educate yourself on how Medicare works and how to enroll. Seemingly small mistakes could result in substantial penalties.

Medicare Part B Deadlines

Medicare Part A is hospital insurance and covers inpatient stays, skilled nursing facilities, and hospice. Part A is free if you worked and paid Medicare taxes for at least 10 years. Medicare Part B is an optional program that covers outpatient services including doctor’s visits, lab tests, preventative screenings, home healthcare, and medical equipment. The vast majority of retirees sign up for Part B.

Part B participants pay monthly premiums for their coverage. Most people will pay $202.90 per month in 2026, but individuals making above $109,000 and couples making above $218,000 in annual income will pay more.

When you sign up is very important. The initial enrollment period starts three months before your 65th birthday and runs until three months after your birthday. There are penalties if you fail to sign up during this time, resulting in higher Part B premiums for your entire life. “You’ll pay an extra 10% for each year you could have signed up for Part B, but didn’t,” according to Medicare.

For example, if you waited two full years to sign up for Part B and didn’t qualify for a Special Enrollment Period, your premium would go up from $202.90 to $243.48. That hike will add up over time.

One exception: If you’re still working at age 65 and have employer-sponsored health insurance (or if you’re covered by your spouse’s company plan), you can delay signing up for Part B without penalty. It’s important to note that Medicare doesn’t consider COBRA plans to be eligible.

If your employer-sponsored insurance coverage ends, you’re eligible for a Special Enrollment Period. Medicare gives you eight months to sign up after the group health plan coverage or the employment ends, whichever happens first. If you wait past that time, penalties may apply.

What About Part D Coverage?

Medicare Part D is an optional plan to cover prescription drug costs through private insurance companies. “In 2025, 54.8 million of the 68.8 million Medicare beneficiaries in total are enrolled in Medicare Part D plans, including employer-only group plans,” according to KFF, a public policy research organization. Part D is included automatically for those who have Medicare Advantage (Part C).

Enrollees pay monthly premiums for Part D coverage, which vary among providers. The base premium is $38.99 and goes up from there. Enrollees with higher incomes usually pay more. Deductibles apply, though Medicare states: “No Medicare drug plan may have a deductible more than $615 in 2026, and some plans have no deductible.” There may also be copayments due, depending on the plan.

Like Part B, Part D imposes a late-fee penalty in many instances if your fail to join during the initial enrollment period. “You’ll pay an extra 1% for each month (that’s 12% a year) if you don’t join a Medicare drug plan when you first get Medicare, and go 63 days or more without creditable drug coverage,” according to Medicare.

What is creditable drug coverage? Basically it’s any insurance “that’s expected to pay, on average, at least as much as Medicare drug coverage.” This includes drug coverage from a current or former employer or union, the Department of Veterans Affairs (VA), and other sources.

For example, if you waited 14 months after you were eligible for Medicare to join Plan D, and you didn’t have creditable drug coverage, you’ll have to pay a 14% late enrollment penalty on top of your monthly plan premium. For most people, this would cost an extra $5.50 per month. “This monthly penalty is added for as long as you have Medicare drug coverage, even if you switch plans,” Medicare says.

For more information, Medicare offers a guide to when coverage starts and tips on how to avoid the Part B and D penalties.