Medicare Late-Enrollment Penalties: How much they actually cost in 2026.

A lot of what's written about Medicare penalties is scarier than the math itself. The penalty exists, it's permanent, and the rules are specific. Here's exactly what it costs in 2026, who gets hit by it, and the small set of situations where it can be undone.

The honest goal of this article isn't to scare you into action. It's to show you the numbers, so you can make a clear-eyed decision about your own timing.

The Part B late-enrollment penalty

If you miss your Initial Enrollment Period for Medicare Part B and don't qualify for a Special Enrollment Period, you'll usually owe a Part B late-enrollment penalty when you eventually enroll.

In 2026 the standard Part B premium is $202.90/month, and the penalty is 10% of that premium for every full 12 months you delayed. So one full year late adds about $20.29/month, two years about $40.58, and so on — added to your premium and kept for life. A few details that matter:

• The penalty is calculated against the current year's standard premium, so it increases over time as the Part B premium increases.
• It's calculated in 12-month blocks. Eight months of delay doesn't trigger a partial penalty — it has to be a full 12-month period.
• It applies on top of any income-related surcharge (IRMAA) you may owe. The two are separate.

The Part D late-enrollment penalty

The Part D drug plan late-enrollment penalty works differently than the Part B one. Instead of being tied to your premium, it's tied to a national average.

Penalty = 1% of the "national base beneficiary premium" × the number of full months you went without creditable drug coverage.

The national base beneficiary premium is set by CMS each year. For 2026 it is $38.99/month, so the penalty works out to about 39 cents (1% of $38.99) for each full month you went without creditable coverage. The figure changes annually, so the dollar amount of an existing penalty is recalculated each year against the current base.

A worked example: if you went 24 months without creditable Part D coverage, the penalty is 24% of $38.99 = $9.36, which CMS rounds to the nearest 10 cents — so about $9.40/month, added to whatever Part D plan premium you eventually choose. That penalty stays with you for as long as you have Part D — meaning, in practice, for life.

A few details that matter:

• "Creditable coverage" means a drug plan that's at least as good as Medicare's standard. Most employer drug plans qualify. Some retiree plans qualify. Some don't.
• COBRA drug coverage is generally creditable for Part D — but is not creditable for Part B. The rules differ for each part.
• You usually get a notice each year from your current drug coverage saying whether it's creditable. Hang onto those notices.

Who gets hit with these penalties?

The single most common scenario we see in our office: someone who thought they had coverage and didn't. Variations include:

• Someone retired and went on COBRA, assuming COBRA counted as creditable coverage for Part B. It doesn't. They missed their 8-month Special Enrollment Period and ended up paying a Part B penalty when they finally enrolled.
• Someone stayed on a spouse's plan through a small employer (fewer than 20 employees), not realizing Medicare is supposed to be primary in that situation at age 65. The employer plan's drug coverage may have been creditable for Part D, but the timing rules around Part B were missed.
• Someone retired from a large employer and got a buy-out package that included a drug benefit. The benefit wasn't creditable, but the paperwork was unclear. By the time they realized, they'd accumulated 18 months of Part D penalty.
• Someone delayed enrollment because they were healthy and didn't think they needed it. The penalty caught up with them when they did need it.

Who's exempt from the penalties?

Some people can legitimately delay Part B without penalty:

• Currently working past 65 with group coverage at a 20+ employee firm. Medicare can be secondary. You can usually delay Part B until your group coverage ends, then enroll during your 8-month Special Enrollment Period.
• Covered through a spouse's current-employer plan at a 20+ employee firm. Same logic.
• TRICARE for Life or other federal coverage with specific exemptions. Different rules apply for federal retirees in some categories — get this checked.
• VA coverage is NOT creditable for Part B in the same way employer coverage is. VA enrollees often still want Part B for non-VA care. Talk to a VSO and an insurance agent together.

If you fall into one of these exempt categories, you have to actually enroll on time when the qualifying coverage ends. The exemption isn't unlimited — it's a window. Missing the window means starting the penalty clock.

Can the penalty be removed?

This is the most-asked question we get on penalties, and the honest answer is: rarely, but sometimes.

Equitable relief.

If you can show that you didn't enroll on time because of an error or misinformation from a federal employee — for example, Social Security telling you something incorrect — you may be able to request equitable relief. The process involves documentation and a written request. It's slow, and the bar is high. Most requests are denied, but some succeed.

Misinformation from your employer or plan.

This can sometimes support an equitable-relief case, especially if you have documentation. Documentation is everything.

Special Enrollment Period after the fact.

If you qualified for an SEP at the time but didn't use it, you may be able to argue you should have. This works in narrow cases.

We've helped a small number of clients pursue these. It's worth a conversation if you have documentation that supports your case. Without documentation, the path is much narrower.

How to avoid the penalties entirely

Three checkpoints — that's it.

If you're not sure which checkpoint applies to you, that's exactly the kind of conversation we have on a 30-minute call.

What to do next

If you're already inside an enrollment window — your IEP, an SEP from losing employer coverage, or AEP for plan changes — don't wait. Call us at (314) 248-6500. We can usually walk through your situation in one phone call.

If you're researching ahead of time because you'll turn 65 in the next 12 months, download our free Turning-65 Medicare Checklist (St. Louis Edition). It builds the timing into your calendar.

If you think you may already owe a penalty and want to understand your options — including whether equitable relief might apply — call us. There's no fee for a conversation, no pressure, and no sales pitch.

The penalty math is the most unforgiving part of Medicare. The good news is that almost all of these penalties are avoidable with a little planning.