Medicare Part B Late Enrollment Penalty: Calculate, Avoid, Appeal

The Medicare Part B late enrollment penalty adds 10% to your monthly Part B premium for every full 12 months you were eligible to enroll but didn’t, and you keep paying that surcharge for as long as you have Part B. In 2026, the standard Part B premium is $202.90 per month, so a two-year delay adds about $40.58 to every monthly bill from then on.¹ The penalty is avoidable, and in some cases removable, but only if you understand which coverage actually protects you and which doesn’t.

How the Penalty Is Calculated

The math is simple. For each full 12-month period you could have had Part B but didn’t, your premium goes up by 10% of the standard premium. Partial years don’t count. A 23-month delay produces a 10% penalty. At 24 months, it jumps to 20%.²

Using 2026 numbers, someone who waited two full years pays 20% of $202.90, which is $40.58 in penalty on top of the premium itself. The total comes to $243.48, which Medicare rounds to $243.50.² The percentage is permanent, but the dollar amount isn’t fixed: it gets recalculated each year against whatever the standard premium is, so the penalty rises when the base premium rises.

Only months after your Initial Enrollment Period closes count toward the penalty, and months you were covered under a qualifying employer group health plan tied to current employment are excluded.³

If You Also Pay IRMAA

Higher-income beneficiaries pay an Income-Related Monthly Adjustment Amount on top of the standard premium. In 2026, IRMAA ranges from $81.20 to $487.00 per month depending on your modified adjusted gross income.¹ The penalty is calculated only against the $202.90 standard premium, not against the IRMAA portion.⁴ Your bill is the penalized premium plus the full IRMAA amount.

When the Clock Starts

Most people become eligible for Part B during a seven-month Initial Enrollment Period: three months before the month you turn 65, your birthday month, and three months after.⁵ If you don’t enroll during that window and don’t have qualifying employer coverage, the penalty clock starts the day after your Initial Enrollment Period ends.

Miss the window and you’re generally stuck waiting for the General Enrollment Period, which runs January 1 through March 31 each year. Coverage begins the month after you sign up.⁶ The penalty for every full 12 months you were eligible but unenrolled still attaches, and it stays with you.

Coverage That Protects You From the Penalty

The main way to delay Part B safely is to have group health coverage through your own or your spouse’s current employment. While that coverage stays active, you can wait. When the job or the group coverage ends, whichever comes first, you get an eight-month Special Enrollment Period to sign up without penalty.⁷ Coverage during this Special Enrollment Period generally starts the first month after you enroll.⁶

The 20-Employee Rule

Not every employer plan qualifies. For a single-employer plan to count as primary coverage that protects you from the penalty, the employer generally needs at least 20 employees, full-time or part-time. If the employer has fewer than 20 employees, Medicare is the primary payer and you should already be enrolled in Part B.⁸ There is one exception: if a small employer participates in a multi-employer plan where at least one participating employer has 20 or more employees, Medicare becomes secondary for everyone in that plan. The count is based on actual employees, not plan enrollees.

Coverage People Think Protects Them (But Doesn’t)

This is where the penalty catches most people. Several common types of coverage look like health insurance but do not qualify as current-employment coverage for Part B purposes.

COBRA and retiree plans. Neither counts. If your active employment ends and you elect COBRA, the penalty clock starts when your employment ended, not when COBRA runs out.⁷ Early retirees who plan to ride COBRA to 65 often find out too late that they’ve been accumulating penalty months the whole time.

VA healthcare. VA coverage is not creditable for Part B. If you rely on VA care and skip Part B, you will owe the penalty when you eventually sign up, and the VA itself warns that it grows with every year of delay and lasts for life.⁹

TRICARE For Life. TRICARE For Life is a wraparound that supplements Part A and Part B, and it requires both to be in effect. If you don’t enroll in Part B, you lose TRICARE For Life entirely.¹⁰ Military retirees who assume TRICARE replaces the need for Part B are mistaken, and any delay still generates a penalty.

Ways to Erase an Existing Penalty

Medicare Savings Programs

If your income is low enough to qualify for a Medicare Savings Program, you may be exempt from the Part B penalty altogether. Qualifying for the Qualified Medicare Beneficiary or Qualifying Individual program means the state Medicaid program pays your Part B premium, including any penalty amount.¹¹ Some states set higher income and resource limits than the federal baseline, so it’s worth applying even if you think you’re over.¹² Enrolling in a Medicare Savings Program also triggers automatic Part B enrollment outside the normal enrollment periods.

End-Stage Renal Disease

People who develop end-stage renal disease after already being eligible for Medicare get a reset. If you opted out of Part B when first eligible based on age or disability and you later develop ESRD, Social Security gives you a new initial enrollment period, and you can sign up without any penalty. If you were already paying a late enrollment penalty when ESRD Medicare kicks in, the penalty is eliminated and your premium drops to the standard amount.¹³

Appealing the Penalty

If you believe the penalty was applied incorrectly because you actually had qualifying employer coverage, you can ask Social Security to reconsider. The outcome usually comes down to paperwork and timing.

The Forms

Two CMS forms do the work. Form CMS-40B is the application to enroll in Part B during a Special Enrollment Period. Form CMS-L564, Request for Employment Information, verifies the dates you were covered by group health insurance through active employment, and your employer’s HR office usually completes and signs it.¹⁴ If the employer has closed or won’t respond, gather what you can: pay stubs showing insurance deductions, W-2s indicating employer-provided coverage, insurance cards, and explanation of benefits statements from the prior insurer.

The 60-Day Deadline

You have 60 days from the date you receive the penalty notice to file a reconsideration with the Social Security Administration.¹⁵ Submit the forms to your local Social Security field office by mail or in person. Use certified mail or get a date-stamped receipt so you can prove timely filing. Keep paying the penalized premium while the review is pending so your coverage doesn’t lapse. If you win, the surcharge is removed and you get a refund of what you overpaid.

If You Miss the 60 Days

Late filers have to show “good cause” for the delay. Social Security weighs factors like serious illness, a family emergency, misleading information from SSA itself, and language or other limitations that got in the way. A house fire that destroyed your records, hospitalization, or filing with the wrong agency in good faith can all qualify.¹⁶ Forgetting or not understanding the deadline, by itself, isn’t enough.

Equitable Relief for Bad Information From the Government

A separate remedy exists if a Social Security employee, a CMS representative, or another federal agent gave you incorrect information about enrollment and you missed your window because of it. It’s called equitable relief, and it requires a government error or misrepresentation, actual harm to your enrollment rights, and evidence tying the two together.¹⁷

Relief also reaches situations where a third party, like an employer or insurance company, passed along bad information that originated with a federal employee. If your benefits office told you that you didn’t need Part B, and they got that guidance from a Social Security representative, you may qualify. There is no time limit on requesting this relief.¹⁷

The standard is specific. General hardship or simply having a sympathetic reason for not enrolling isn’t enough. You have to show that a federal employee’s action or inaction directly caused the problem. If you can prove it, both the penalty and any enrollment delay can be unwound. The regulation says SSA or CMS may provide relief whenever enrollment was affected by “the error, misrepresentation, or inaction of a Federal employee, or any person authorized by the Federal Government to act on its behalf.”¹⁸

1
Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles
2
Medicare.gov. Avoid Late Enrollment Penalties
3
Office of the Law Revision Counsel. 42 USC 1395r
4
Social Security Administration. How IRMAA Is Calculated and How IRMAA Affects the Total Medicare Premium
5
eCFR. 42 CFR 407.14
6
Medicare.gov. When Does Medicare Coverage Start?
7
Social Security Administration. Medicare Part B Late Enrollment Penalty
8
Centers for Medicare & Medicaid Services. MSP Employer Size Guidelines for GHP Arrangements – Part 1
9
U.S. Department of Veterans Affairs. VA Health Care and Other Insurance
10
TRICARE. TRICARE For Life
11
Medicare Interactive. Medicare Part B Late Enrollment Penalties
12
Medicare.gov. Medicare Savings Programs
13
VCU National Training and Data Center. 2026 FAQs About Medicare and End Stage Renal Disease
14
Centers for Medicare & Medicaid Services. CMS-40B – Request for Enrollment in Medicare Part B
15
Medicare Interactive. Appealing the Part B Late Enrollment Penalty
16
Social Security Administration. Good Cause for Extending the Time Limit to File an Appeal
17
Social Security Administration. Conditions for Providing Equitable Relief
18
eCFR. 42 CFR 406.38 – Prejudice to Enrollment Rights Because of Federal Government Error