Glossary
Late enrollment penalty
A late enrollment penalty is a permanent amount added to your premium for signing up late without other valid coverage. Part B adds 10% for each full year you could have had it but did not; Part D adds 1% of the national base premium for each month you went without creditable drug coverage. Both last as long as you have the coverage.
The penalties are designed to encourage on-time enrollment. The Part B penalty is steep and permanent, which is why delaying Part B without active employer coverage is risky. The Part D penalty is smaller but also permanent, and it grows the longer you go without creditable drug coverage.
The way to avoid both is simple: enroll when you are first eligible, or keep coverage that counts as creditable until you do.
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