The Part B Penalty: 10% Per Full Year, Forever

Medicare Part B covers doctor visits, outpatient care, and durable medical equipment, and it carries a monthly premium. If you were eligible for Part B and did not enroll, and no special enrollment period covered the gap, Medicare adds a late enrollment penalty of 10% of the standard premium for each full 12-month period you went without it. The rule lives at 42 U.S.C. §1395r(b) and is restated in plain language on Medicare.gov’s Avoid late enrollment penalties page.

Two details do most of the damage:

• Only full 12-month periods count. Twenty-three months of delay is one period, not two. Twenty-four months is two. The rounding always favors the shorter delay, which is the one piece of good news in the whole rule.
• It is permanent. The surcharge applies for as long as you hold Part B. Joining a Medicare Advantage plan does not shed it, because Part B premiums are still owed under Advantage.

The penalty is a percentage of the standard Part B premium, which is $202.90 per month in 2026. So one missed 12-month period costs $20.29 per month, two costs $40.58 per month, and a five-year delay costs $101.45 per month — $1,217 a year, every year, for as long as you are on Medicare.

Months Delayed	Full 12-Month Periods	Penalty Rate	Added to Premium (2026)
0 – 11	0	0%	$0.00
12 – 23	1	10%	$20.29
24 – 35	2	20%	$40.58
36 – 47	3	30%	$60.87
48 – 59	4	40%	$81.16
60 – 71	5	50%	$101.45

The Part D Penalty: 1% Per Uncovered Month, Also Forever

Part D is prescription drug coverage, and it has its own, entirely separate penalty. Medicare adds 1% of the national base beneficiary premium for every full month you were eligible for Part D but had neither a Part D plan nor other creditable drug coverage. Unlike Part B, there is no 12-month rounding — every single month counts.

The national base beneficiary premium is set each year by CMS in its annual Part D national average bid announcement. For 2026 it is $38.99, so each uncovered month adds roughly $0.39 per month. The total is rounded to the nearest $0.10 and bolted onto whatever your drug plan charges. Thirty-six uncovered months is 36%, or about $14.00 per month for life.

One precision worth carrying: 1% is a floor, not the whole rule. 42 U.S.C. §1395w-113(b)(3) sets the penalty at the greater of “an amount that the Secretary determines is actuarially sound for each uncovered month” or “1 percent of the base beneficiary premium… for each such uncovered month.” In practice CMS has used the 1% figure, which is what this calculator applies and what every published example uses — but the statute leaves room for a higher actuarially-determined amount, so treat the result below as the operative minimum rather than a ceiling written into law.

“Creditable” is the word that decides everything here. Employer drug coverage, union plans, TRICARE, and VA drug benefits usually qualify; a plan sponsor is required to tell you in writing each year whether its drug coverage is creditable. Keep those notices. They are the evidence that closes the gap if Medicare later asks why you had no Part D plan.

One asymmetry worth internalizing: because the base premium is re-set every year, your Part D penalty changes every year even though your percentage never does. The percentage is frozen at the moment you enroll; the dollar amount tracks the base premium upward.

The Special Enrollment Periods, and the One That COBRA Breaks

Neither penalty applies if a special enrollment period (SEP) covers your gap. The main one is the employer SEP, and it is the rule most people are relying on without quite knowing its edges.

The 8-month Part B SEP

If you (or your spouse) kept working past 65 and stayed on an employer group health plan based on current employment, Part B enrollment can wait. Once that employment or that coverage ends — whichever comes first — you get an 8-month special enrollment period starting the following month. Enroll inside it and there is no Part B penalty at all. The SEP is granted by 42 U.S.C. §1395p(i)(3)–(4) and implemented at 42 CFR 406.24.

The COBRA trap is a Part B trap — and only a Part B trap

Here is the part that costs people real money, and the part that is routinely overstated. COBRA is not coverage based on current employment. Neither is retiree coverage, nor a severance health continuation. That is not an opinion about how insurers behave — it is 42 CFR 411.104, which defines “current employment status” and excludes continuation coverage from it. The 8-month clock starts when the active employment coverage ends, not when COBRA ends.

Run the arithmetic on the standard case. You retire, elect 18 months of COBRA, and enroll in Part B the month COBRA lapses. Your SEP expired 10 months earlier, and you are into a general enrollment period with an 18-month Part B gap on the record — one full 12-month period, and a 10% permanent Part B penalty you did not know you were buying. Enter 18 in the Part B box above and 0 in the Part D box to price exactly that.

Now the half of this that is usually reported wrong. COBRA is not disqualified for Part D. The Part D penalty counts only months without “creditable prescription drug coverage”, and 42 U.S.C. §1395w-113(b)(4)(C) puts “a group health plan” on the list of coverage that qualifies — COBRA is a continuation of exactly that. The test in §1395w-113(b)(5) is purely actuarial: the coverage must have an actuarial value that “equals or exceeds the actuarial value of standard prescription drug coverage”. Nothing in either provision asks whether the coverage came from current employment — that condition exists only on the Part B side. A COBRA continuation of a normal employer drug plan is almost always creditable, and the plan sponsor has to tell you so in writing each year. So the classic 18-month COBRA retirement usually produces a Part B penalty and no Part D penalty at all — which is why the calculator above takes the two counts separately. The trap is Part B. Treating it as both parts overstates the damage and sends people looking for relief they do not need.

Two caveats keep that from being a free pass. The creditable-coverage determination belongs to the plan, not to you — if the notice says the drug coverage is not creditable, those COBRA months count against you. And the Part D SEP still has to be used: creditable coverage stops the penalty clock while it lasts, but once it ends you have 63 days to enroll.

The Part D window is shorter

Part D’s equivalent window is 63 days from the end of creditable drug coverage, not 8 months. People who handle Part B correctly still collect a Part D penalty surprisingly often, simply because they assumed one deadline governed both.

Under 20 employees: the employer plan may not protect you at all

The Part B SEP assumes the employer plan is the primary payer. For an employer with fewer than 20 employees, the Medicare Secondary Payer rules run the other way. 42 U.S.C. §1395y(b)(1)(A)(ii) switches the primary-payer rule off entirely “unless the plan is a plan of, or contributed to by, an employer that has 20 or more employees for each working day in each of 20 or more calendar weeks in the current calendar year or the preceding calendar year”. Below that line Medicare is primary and the group health plan pays second. In that situation the group plan can legally pay as though you already had Part B, so declining Part B at 65 can leave you with most of a hospital bill and a late enrollment penalty on top. Ask the employer, in writing, which payer is primary before relying on the SEP.

The general enrollment period, and why the real gap is longer than your count

If no SEP covers you, the fallback is the general enrollment period, January 1 to March 31 each year. Two things follow from that. Miss your window in, say, April and you cannot enroll again until the following January — the calendar, not your intent, sets the wait. And coverage does not start the day you sign: since 2023, general-enrollment coverage begins the first day of the month after you enroll (before 2023 it did not start until July 1, which is why older accounts of this rule are harsher). Both effects mean the number of uncovered months on the record is usually larger than a naive count from the date you meant to enrol — and it is the number Medicare records, not the number you intended, that the penalty is charged on.

Relief: Narrow, Real, and Worth Knowing By Name

The penalties are permanent in the ordinary case. The exceptions are specific enough to check against.

• Exceptional-conditions SEPs (2023). CMS created a standing set of special enrollment periods for Part B at 42 CFR 407.23, effective 2023. Paragraph (b) covers a declared disaster or emergency, paragraph (c) covers misrepresentation or incorrect information from your employer or group health plan (or their agents and brokers), (d) covers release from incarceration, (e) covers termination of Medicaid coverage, and (f) is a residual “other exceptional conditions” category decided case by case. These are not merely a way back in: 42 CFR 408.24 excludes from the penalty count “any months of non-coverage in accordance with an individual’s use of an exceptional conditions SEP under § 407.23… provided the individual enrolls within the duration of the SEP” — so enrolling inside one carries no late enrollment penalty. The misrepresentation SEP at (c) is aimed squarely at the person who was told, wrongly, that their retiree plan or COBRA let them skip Part B.
• Equitable relief. Longer-standing and broader in principle, granted where a federal employee or an agent of the government gave you incorrect information. It is discretionary and slow, which is why the 2023 SEPs matter: they turned some of the same fact patterns into a rule rather than a request.
• Extra Help (the Part D low-income subsidy). Qualifying eliminates the Part D late enrollment penalty for as long as you qualify.
• A second initial enrollment period resets the Part D count. Someone who came onto Medicare through disability and later turns 65 gets a fresh Part D initial enrollment period, and CMS’s creditable-coverage and late-enrollment-penalty guidance instructs plans to reset the accumulated uncovered months to zero at that point, counting a future gap only from the end of the new enrollment period. Note the status of that rule honestly: it is operational guidance to Part D sponsors, not something written into 42 CFR 423.46, which sets out the 63-day test and says nothing about age 65. There is no Part B equivalent.

Note what is not on that list: not knowing about the deadline, and not receiving a reminder. Neither is a ground for relief.

Where This Sits in a Retirement Plan

A late enrollment penalty is not the only permanent add-on to a Medicare premium. IRMAA — the income-related monthly adjustment amount — layers an income-based surcharge on both Part B and Part D, priced off your tax return from two years earlier. A late enrollment penalty and an IRMAA tier stack: the penalty percentage is applied to the standard premium, and the IRMAA surcharge is added on top. Someone with a 20% Part B penalty in a middle 2026 IRMAA bracket can be paying well over double the headline premium.

That two-year lookback is what makes this a planning problem rather than a paperwork problem. A large Roth conversion, a property sale, or a lumpy first RMD raises the MAGI that prices your premiums two years later, and Social Security withholds those premiums straight out of your benefit — see how IRMAA reaches your Social Security check.

For anyone retiring before 65, the handoff matters as much as the destination. The years between an early retirement and Medicare eligibility usually run on an ACA marketplace plan, where the incentive is to hold MAGI down for subsidies. At 65 the logic inverts — the subsidy cliff disappears and the IRMAA lookback takes over, which is why the two years before Medicare are often the best conversion window you will ever get. Our guide to healthcare before Medicare walks the full bridge.

The one thing to carry away from the calculator above: the delay is a one-time decision and the penalty is a lifetime cash flow. Take the worked case — 24 months without Part B and 24 months without creditable drug coverage. Part B is two full 12-month periods, so 20% of the standard premium: $40.58 a month. Part D is 24 uncovered months, so 24% of the national base beneficiary premium, rounded to the nearest $0.10: $9.40 a month. Together that is $49.98 a month, or $599.76 a year — and held flat at 2026 premiums over a 25-year retirement, $14,994 in nominal dollars. Put those same two numbers into the calculator above and it returns exactly these figures; every one of them is computed by the same function, so the copy cannot drift away from the tool. Real premiums rise, so treat that horizon total as a floor.

How is the Medicare Part B late enrollment penalty calculated?

The Part B penalty adds 10% of the standard Part B premium for each FULL 12-month period you could have had Part B but did not enroll. Partial periods do not count, so 23 months of delay is one full period (10%) and 24 months is two (20%). In 2026 the standard Part B premium is $202.90 per month, so each full 12-month period adds about $20.29 per month. The penalty is set out at 42 U.S.C. §1395r(b) and is described on Medicare.gov under Avoid late enrollment penalties.

How is the Medicare Part D late enrollment penalty calculated?

The Part D penalty is 1% of the national base beneficiary premium for each full month you went without Part D or other creditable prescription drug coverage after your Initial Enrollment Period ended. The 2026 national base beneficiary premium is $38.99, set by CMS in its annual Part D national average bid announcement, so each uncovered month adds about $0.39 per month. The result is rounded to the nearest $0.10 and added to whatever your drug plan charges. Because the base premium is reset every year, the dollar amount of the Part D penalty moves each year even though the percentage does not.

Do the Medicare late enrollment penalties ever go away?

In the ordinary case, no. Both penalties are permanent. The Part B penalty is charged for as long as you have Part B, and it follows you into a Medicare Advantage plan because Part B premiums are still owed there. The Part D penalty is charged for as long as you have Medicare drug coverage and stays with you when you change drug plans. The exceptions are specific: Extra Help removes the Part D penalty while you qualify; enrolling under one of the 2023 exceptional-conditions special enrollment periods at 42 CFR 407.23, including the one at paragraph (c) for misrepresentation by an employer or group health plan, carries no penalty at all because 42 CFR 408.24 excludes those months from the count; equitable relief covers bad information from a federal employee; and CMS guidance to Part D sponsors resets the uncovered-month count to zero when someone who had Medicare through disability reaches a new initial enrollment period at 65.

Does COBRA count as employer coverage for the Part B special enrollment period?

No, and this is the single most expensive misunderstanding in Medicare enrollment. The Part B special enrollment period is built on coverage from CURRENT employment, meaning you or your spouse is an active employee covered by the employer group health plan. COBRA, retiree coverage, and severance continuation are none of those. The 8-month special enrollment clock starts when the active employment or the employment-based coverage ends, not when COBRA runs out, so an 18-month COBRA run leaves you roughly 10 months past the deadline and holding a permanent penalty.

How long is the special enrollment period after employer coverage ends?

For Part B, the special enrollment period runs for 8 months beginning the month after the employment ends or the group health plan coverage based on current employment ends, whichever comes first. Enrolling inside that window means no Part B late enrollment penalty at all. For Part D, the comparable window is much shorter at 63 days from the end of creditable drug coverage, which is why people who handle Part B correctly still sometimes collect a Part D penalty.