The Medicare Part B late enrollment penalty adds 10% to your monthly Part B premium for every full 12-month period you were eligible for Part B but didn't enroll and didn't have other qualifying health coverage. Unlike some other penalties, this one generally doesn't go away — you pay it for as long as you have Part B, which for most people means for life.
Here's how the math works in practice. Suppose you were eligible for Part B for two full years before you signed up and had no other creditable coverage during that time. Your penalty would be 20% (10% x 2) added to the standard Part B premium every month, indefinitely. The penalty is based on the standard premium amount, not whatever premium you happen to be paying, so it rises whenever the standard premium increases.
The penalty only applies if you go without Part B or without "creditable coverage" during your enrollment window. Creditable coverage usually means health insurance from your own or a spouse's current employer that is comparable to Medicare — not retiree coverage, not COBRA, and not marketplace insurance. If you're still working past 65 and covered by a qualifying employer plan, you can typically delay Part B without penalty and then sign up later during a Special Enrollment Period, which runs for eight months after the employment or the coverage ends, whichever comes first.
People most often get hit with this penalty when they assume Medicare automatically starts at 65, don't realize they need to actively enroll, or mistakenly believe COBRA or retiree health coverage counts as creditable coverage that lets them delay Part B without consequence. It doesn't. If you let COBRA or retiree coverage run out and then try to sign up for Part B, you may find you're past your Initial Enrollment Period and facing both a penalty and a gap in coverage until the next General Enrollment Period.
Your Initial Enrollment Period is a seven-month window: it starts three months before the month you turn 65, includes your birthday month, and extends three months after. If you miss it and don't qualify for a Special Enrollment Period through active employer coverage, you'll need to wait for the General Enrollment Period, which runs January through March each year, with coverage starting the month after you sign up.
The best way to avoid this penalty is simple: know your enrollment window, confirm whether your current coverage actually counts as creditable, and if you're not sure, call Social Security or a State Health Insurance Assistance Program (SHIP) counselor before your window closes. These services are free and can look at your specific work and coverage history to tell you exactly when you need to act.