How to Avoid Medicare Late-Enrollment Penalties

Could I pay a Medicare penalty if I wait to enroll?

Yes. Waiting past the right enrollment window can create a lasting monthly cost and can delay the Medicare coverage your ICHRA (CHOICE) benefit requires.

Quick answer

Yes. If you delay Medicare Part B or Part D without the right qualifying coverage, you can face a late-enrollment penalty. These are not one-time fees. They are added to your monthly premium, increase the longer you wait, and usually last as long as you have that coverage. For the Medicare + ICHRA (CHOICE) path, the clearest way to avoid this risk is to enroll in Parts A and B on time and complete your drug coverage decision before your prior plan ends.

Part B: the penalty tied to delayed medical coverage

Part B is the part of Medicare that covers doctors, outpatient care, preventive services, imaging, and many other medical services. If you miss the enrollment period that applies to you and do not qualify for a Special Enrollment Period, you may have to wait for another opportunity to enroll. You may also owe a Part B late-enrollment penalty that increases your monthly Part B premium.

The Part B formula is direct: your premium increases 10% for every full 12-month period you could have had Part B but did not. A one-year delay can mean a 10% increase. A two-full-year delay can mean a 20% increase. For most people, that added amount stays in the monthly Part B premium for as long as they have Part B. The dollar amount changes as the standard Part B premium changes, which is why this page uses the formula rather than a single annual dollar figure.

This is why benefitbay treats Part B as the non-negotiable gate for ICHRA (CHOICE). The Medicare beneficiary needs Part B active. Staying on the prior group or individual plan as your own coverage is not an alternative route to the benefit.

Part D: the penalty tied to prescription drug coverage

Part D covers outpatient prescription drugs. If you go 63 days or more without Medicare drug coverage or other creditable drug coverage after the relevant enrollment window, you may owe a Part D late-enrollment penalty when you enroll. The penalty is added to your monthly Part D cost.

The Part D formula is 1% of the national base beneficiary premium for every month you went without creditable drug coverage. A 12-month gap creates a 12% penalty. A 24-month gap creates a 24% penalty. The national base premium changes each year, so the penalty dollar amount can change, but the penalty percentage follows you for as long as you have Part D coverage—even if you switch drug plans.

Do not assume “I do not take prescriptions” is a reason to skip the decision. You still need to determine whether you will have Part D or other creditable drug coverage. Keep any written creditable-coverage notice from your current plan.

Part A: a separate but important question

Most people receive premium-free Part A, but not everyone does. If you must buy Part A and delay it, a separate late-enrollment penalty can apply. The premium can increase 10%, and the higher amount can last for twice the number of years you delayed enrollment. For example, a two-year delay can mean paying the higher Part A premium for four years. Work history, a spouse’s work history, and timing all matter. If you are unsure whether you qualify for premium-free Part A, raise that question early with the benefitbay Medicare Team and verify it with Social Security.

A late penalty is not an IRMAA surcharge

A late-enrollment penalty reflects delayed enrollment. An Income-Related Monthly Adjustment Amount, or IRMAA, is an income-based Social Security surcharge that can apply to Part B and Part D. A private-plan premium is what a Medicare Advantage, Part D, or Medicare Supplement Insurance carrier charges. These costs can appear together, but they are not the same thing.

What stops the risk