Medicare 2026

Medicare Late Penalties: How Part B and D Fees Work

KANNAPOLIS, N.C. — One of the most common — and most avoidable — mistakes people make with Medicare is signing up late. Miss the window for Part B or Part D without a good reason, and you could pay a penalty every month for as long as you have that coverage. Here's a plain-English look at how those penalties work and how to sidestep them.

Why late-enrollment penalties exist

Medicare is built on the idea that most people pay in over time. If everyone waited until they were sick to sign up, premiums would climb for everyone. So the program adds a monthly surcharge for people who delay Part B (doctor visits and outpatient care) or Part D (prescription drugs) without keeping other qualifying coverage in place.

The key word is "qualifying." Not every kind of insurance counts, and the rules are different for Part B and Part D. That's where many people get tripped up.

How the Part B penalty works

If you don't sign up for Part B when you're first eligible — usually the seven-month window around your 65th birthday — and you don't have coverage from a current employer, you may owe a penalty when you finally enroll.

The Part B late-enrollment penalty adds 10% to your monthly premium for each full 12-month period you could have had Part B but didn't. That extra amount generally sticks with you the entire time you're on Part B. So a two-year delay means a 20% higher premium — not just once, but every month, likely for the rest of your life.

There is one big exception: if you (or your spouse) are still working and have group health coverage from that job, you can usually delay Part B without penalty and get a Special Enrollment Period when the job coverage ends. COBRA and retiree coverage do not count for this purpose, which surprises a lot of people.

How the Part D penalty works

Part D covers prescription drugs, and it has its own late-enrollment penalty. If you go 63 days or more in a row without Part D or other "creditable" drug coverage after you're first eligible, you can be charged a penalty when you eventually enroll.

The Part D penalty is calculated as 1% of the "national base beneficiary premium" for each full month you went without creditable coverage. That amount is added to your Part D premium every month, and it can grow the longer you wait.

Creditable coverage usually means drug coverage from an employer, union, or the VA that is at least as good as standard Part D. Your plan should send you a notice each year telling you whether your coverage is creditable — keep those letters.

How to avoid the penalties

A few practical steps go a long way:

• Know your Initial Enrollment Period. It's the three months before your 65th birthday month, your birthday month, and the three months after — seven months total.
• If you're still working past 65, confirm in writing that your employer plan is creditable for both medical and drug coverage. Ask HR, and save the letter.
• Don't rely on COBRA or retiree plans to delay Part B. They generally don't trigger a Special Enrollment Period.
• Enroll during the right window. Once your employer coverage ends, you typically have 8 months to sign up for Part B without penalty and 63 days for Part D.
• Use the Annual Enrollment Period (Oct. 15 – Dec. 7) to review your drug coverage each year.

What's available in the Kannapolis area

Kannapolis is in Cabarrus County, where Medicare-eligible residents can choose from Original Medicare plus a stand-alone Part D plan, or a Medicare Advantage plan that often includes drug coverage. The specific number of plans changes each year, and CMS publishes updated plan finders every fall. Availability itself doesn't affect penalties — but signing up on time for whichever path you choose does.

A few 2027 numbers worth knowing

While we're on the subject of Part D, some figures for 2027 are worth having in mind:

• The Part D out-of-pocket cap is $2,100 in 2026 ($2,400 in 2027).
• The Part D maximum deductible is $615 in 2026 ($700 in 2027).
• The old "donut hole" coverage gap has been eliminated as of 2025 — Part D now has three phases instead of four.
• The Medicare Prescription Payment Plan lets you spread drug costs across the year in monthly installments if that helps your budget.
• IRMAA surcharges — extra premium amounts for higher-income enrollees — start above $109,000 in income for a single filer in 2026.