Medicare 2026

Medicare Part B and Part D late penalties: how to avoid them

# Medicare late-enrollment penalties: how they work and how to avoid…

MINNEAPOLIS — Missing a Medicare deadline can quietly cost you for the rest of your life. Part B and Part D both carry late-enrollment penalties that get added to your monthly premium — often permanently. The good news: once you understand the rules, they are not hard to avoid.

Here in Minneapolis, and across Hennepin County, thousands of people become Medicare-eligible each year. Some delay signing up because they are still working, still on a spouse's plan, or simply unsure what to do. Knowing which choices trigger a penalty — and which ones don't — is the key.

How the Part B late penalty works

Part B covers doctor visits and outpatient care. If you don't sign up when you're first eligible — and you don't have other coverage that counts — Medicare adds 10% to your Part B premium for each full 12-month period you could have had it but didn't.

That extra amount is not a one-time fee. In most cases, you pay it every month for as long as you have Part B. So a two-year delay means a 20% higher premium, essentially for life.

Your Initial Enrollment Period is a seven-month window: the three months before the month you turn 65, your birthday month, and the three months after.

How the Part D late penalty works

Part D covers prescription drugs. The penalty here is based on how many full months you went without "creditable" drug coverage after your Initial Enrollment Period ended.

Medicare multiplies 1% by the "national base beneficiary premium" for each of those months, rounds it to the nearest 10 cents, and adds that amount to your Part D premium. Like the Part B penalty, it generally sticks with you for as long as you have Part D coverage.

"Creditable" simply means the drug coverage you had — from an employer, union, or the VA, for example — was expected to pay, on average, at least as much as standard Medicare drug coverage. Your plan should send you a notice each year telling you whether it counts.

The most common ways people trip up

A few patterns show up again and again:

• Retiring, losing employer coverage, and waiting too long to enroll in Part B.
• Skipping Part D because you don't take medications now — then needing drugs later.
• Assuming COBRA or retiree coverage counts as creditable. Sometimes it does, sometimes it doesn't. Read the notice carefully.
• Missing the General Enrollment Period (January 1 – March 31) if you already missed your Initial Enrollment Period.

If you're not sure whether your coverage counts, ask your benefits administrator — in writing — and keep the answer.

How to avoid the penalties

There are three main ways to stay in the clear:

1. Enroll during your Initial Enrollment Period. That seven-month window around your 65th birthday is the simplest path. 2. Keep creditable coverage, then use a Special Enrollment Period. If you're still working and have qualifying employer coverage, you can generally delay Part B and Part D without penalty. When that coverage ends, you have a limited window — usually 8 months for Part B and 63 days for Part D — to enroll. 3. Don't miss the Annual Enrollment Period. October 15 – December 7 is when most people can join, switch, or drop Part D and Medicare Advantage plans for the following year.

For 2026, a few program-level figures are worth knowing as you plan: Part D has a $2,100 out-of-pocket cap, a maximum deductible of $615, and the old coverage gap ("donut hole") has been eliminated in favor of three simpler phases. There is also an optional Medicare Prescription Payment Plan that lets you spread drug costs across the year. Higher earners — generally single filers with income above $109,000 — may pay IRMAA surcharges on top of standard premiums.

What Minneapolis residents should know locally

Minneapolis is in Hennepin County, where Medicare beneficiaries have a range of stand-alone Part D plans and Medicare Advantage plans with drug coverage available through the federal Medicare program. Availability and plan counts are set at the county level, not the city level, so two neighbors in the same ZIP code will generally see the same options.

Minnesota's Senior LinkAge Line (1-800-333-2433) is the state's official SHIP and offers free, unbiased counseling. They can help you sort out whether past coverage was creditable, whether a penalty applies, and how to appeal one if you believe it was assessed in error.