How the number works
Medicare adds 10% to your Part B premium for each full 12-month period you could have had Part B and did not. Two full years late is 20% on top of the standard premium. Five years late is 50%.
Two details matter more than the formula. First, only complete twelve-month blocks count, so eleven months late costs nothing and thirteen months costs a full 10%. Second, the penalty is not a fee you clear. It is attached to your premium for as long as you hold Part B, and because it is calculated as a percentage of the current standard premium, the dollar amount climbs every year that the premium does. A penalty taken on at 67 is still being paid at 89, and it is larger then.
What protects you, and what only looks like it does
The rule is narrower than most people assume. Coverage protects you from the Part B penalty only if it comes from current employment, yours or your spouse's, at an employer with 20 or more employees. That is the whole list.
| Coverage | Protects you from the Part B penalty? |
|---|---|
| Group plan through current employment, 20+ employees | Yes |
| Group plan through current employment, fewer than 20 employees | No. Medicare is primary at 65 regardless |
| COBRA | No |
| Retiree coverage from a former employer | No |
| VA health care | No for Part B. Yes for Part D |
| TRICARE for Life | No. It requires Part B to keep working |
| ACA marketplace plan from HealthCare.gov | No |
| A spouse's plan through their current job, 20+ employees | Yes |
The three ways people actually get caught
In practice almost every penalty traces back to one of these.
Retiring at 65 and electing COBRA
This is the most common one by a wide margin. Someone retires, elects eighteen months of COBRA because the plan is familiar and the doctors are in network, and treats it as continuous coverage. It is not. The day the job ended, the coverage stopped being current employer coverage. The eight-month Special Enrollment Period for Part B started running that same day, and it runs on employment ending, not on COBRA ending. Eighteen months of COBRA outlasts the window by ten months, and the penalty starts accruing in the gap.
If you are retiring at or after 65, enroll in Part B at retirement. Not when COBRA runs out. You can still keep COBRA alongside Medicare if you want the network, but Part B needs to start on time.
Veterans relying on the VA
Central Arkansas has a large veteran population and a VA hospital in Little Rock that many people are perfectly happy with. The distinction that catches them is that VA coverage is creditable for Part D and is not creditable for Part B. A veteran who uses VA pharmacy benefits is genuinely protected from the drug penalty. That same veteran, skipping Part B, has been accruing the Part B penalty the entire time.
It stays invisible until it matters. Someone needs a procedure the VA does not offer locally, or wants to see a cardiologist at Baptist Health, or moves away from a VA facility, and only then discovers that picking up Part B now means a permanent surcharge and a wait until the next General Enrollment Period. If you are a veteran turning 65, take Part B even if you intend to use the VA for everything. Treat it as the thing that keeps your options open.
Staying on a marketplace plan past 65
A marketplace plan does not delay anything. Worse, once you are eligible for premium-free Part A, your eligibility for marketplace subsidies generally ends, so people in this situation are often paying full price for a plan while a Medicare penalty accrues behind it. If you are on a HealthCare.gov plan and approaching 65, this needs attention several months before your birthday, not after.
If the window is already gone
Enrollment happens during the General Enrollment Period, January 1 through March 31. Coverage starts the month after you sign up, which is better than the old rule where you waited until July, but it still means a gap if you are uncovered in the meantime.
Before you accept that, check whether a Special Enrollment Period applies. They exist for losing employer coverage, losing Medicaid, being given bad information by a plan or a federal employee, emergencies and disasters declared by government, and release from incarceration. A Special Enrollment Period avoids the penalty entirely, so it is worth ten minutes of checking before resigning yourself to the General Enrollment Period.
Getting a penalty removed
There is one real route, and it is called equitable relief. If you delayed Part B because a federal employee or a health plan told you something incorrect, you can ask Social Security to waive the penalty and backdate your enrollment. It is a written request with supporting documentation rather than a form appeal, and it is decided case by case.
Two things make it work: something in writing, and specifics. A letter from an HR department stating that you were told your retiree plan was creditable carries weight. A recollection of a phone call in 2019 usually does not. Keep whatever you have, submit it to your local Social Security office, and understand that the answer may be no. It is still worth doing, because the alternative is a surcharge you pay for the rest of your life.
If you are not sure where you stand, that is a short conversation. Lancaster Cook is an independent agent in Little Rock, AHIP certified, Arkansas license #8021079, and reviewing your enrollment history costs nothing.