There are two late enrollment penalties to be aware of when it comes to Medicare. They are the Medicare Part B, and Medicare Part D late enrollment penalties. Here is how they both work:

 

Medicare Part B Late Enrollment Penalty: If you do not sign up for Medicare Part B when you are first eligible, your monthly premium will go up 10% for each 12 month period where you could have had Medicare Part B, but did not. In most cases, the Medicare Part B late enrollment penalty is waived if you have a Special Enrollment Period that allows you to sign up for Part B at a later date - such as continuing to work and staying on your employer group health plan.

 

Medicare Part D Late Enrollment Penalty: If you go 63 days without creditable prescription drug coverage, the Medicare Part D late enrollment penalty will be added to your monthly premium. Medicare calculates the cost of the penalty by taking 1% of the national Medicare Part D average premium ($32.74 in 2020), and multiplying that by the number of months you did not have creditable drug coverage. Creditable drug coverage includes the following: Medicare Part D Prescription Drug plan, Medicare Advantage plan, and in some cases coverage under an employer group health plan.