8 Sneaky Medicare Penalties That Can Cost You Big (And How to Avoid Them)

Missing a Medicare enrollment deadline doesn’t just mean you sign up late — it can mean paying higher premiums for the rest of your life. Medicare late enrollment penalties are permanent, and most people don’t find out about them until it’s too late. Here are 8 penalties you need to know and exactly how to avoid each one.

1. Medicare Part A Late Enrollment Penalty

Most people get Part A free because they or a spouse paid Medicare taxes for at least 10 years. If you don’t qualify for free Part A, you can buy it — but if you miss your initial enrollment window, your premium goes up 10% for twice the number of years you went without coverage.

How to avoid it: Enroll during your Initial Enrollment Period — the 7-month window starting 3 months before your 65th birthday month.

2. Medicare Part B Late Enrollment Penalty

This is the most common and most costly Medicare late enrollment penalty. If you delay Part B without having qualifying “creditable coverage” from an employer, your premium goes up 10% for every full 12-month period you could have had Part B but didn’t — permanently.

In 2026, the standard Part B premium is $185.00/month. A two-year delay means an extra $37/month for life. A five-year delay means an extra $92.50/month — every month, forever.

How to avoid it: Enroll in Part B during your Initial Enrollment Period, or get a Special Enrollment Period through active employer coverage (not COBRA, not retiree coverage).

3. Medicare Part D Late Enrollment Penalty

If you go 63 or more consecutive days without creditable prescription drug coverage, you’ll pay a permanent penalty added to your Part D premium. The penalty is 1% of the national base beneficiary premium per month you went without coverage.

How to avoid it: Enroll in Part D when you first become eligible, or maintain creditable drug coverage from an employer plan.

4. Medigap Open Enrollment Penalty

This isn’t a formal penalty — it’s worse. When you first enroll in Medicare Part B, you have a 6-month window to buy any Medicare Supplement (Medigap) plan without medical underwriting. After that window closes, insurers can deny you or charge more based on your health history.

How to avoid it: Apply for your Medigap plan during your open enrollment window — the 6 months starting when you’re 65 and enrolled in Part B.

5. Medicare Advantage Switching Penalty

This is the one-way door problem. If you enroll in Medicare Advantage and later want to switch to a Medigap supplement plan, you may need to pass medical underwriting. The longer you stay on Advantage, the more health conditions you may accumulate — and the harder it becomes to qualify for Medigap.

How to avoid it: Think carefully before choosing Medicare Advantage. Once you’re in for more than a year, the exit may be medically complicated.

6. IRMAA Income Surcharge Surprise

Higher-income Medicare enrollees pay more for Part B and Part D through the Income-Related Monthly Adjustment Amount (IRMAA). The surcharge is based on your income from two years prior — so a high-income year in 2024 affects your 2026 premiums.

How to avoid it: If your income dropped significantly, file a Life-Changing Event appeal with Social Security. You can request they use more recent income data.

7. Missing the AEP Deadline

The Annual Enrollment Period (AEP) runs October 15 – December 7. If you miss it and want to make changes to a Medicare Advantage or Part D plan, you may have to wait until the next AEP or qualify for a Special Enrollment Period.

How to avoid it: Mark your calendar every year. Review your plan’s Annual Notice of Change (ANOC), which arrives in September.

8. Not Checking Your Employer Coverage Status

Many people delay Medicare enrollment because they’re still working and have employer coverage. This is fine — but only if that employer coverage is “creditable.” Coverage from a company with fewer than 20 employees may not qualify, and delaying Part B in that situation triggers the late enrollment penalty.

How to avoid it: Confirm with your HR department or benefits administrator whether your employer coverage is creditable before delaying Medicare enrollment.

Get Help Avoiding Medicare Late Enrollment Penalties in Arizona

I’m Andy Orlikoff, an independent Medicare broker in Surprise, AZ. I help Arizona residents navigate Medicare late enrollment penalties, enrollment windows, and supplement plan choices — at no cost to you.

Call or text: (623) 742-3878
Email: andy@azhealth.us
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