Medicare's Late Enrollment Penalty - It Lasts A Lifetime


By James DeMartino
September 2017


It’s become increasingly common for people to continue working past age 65.  That’s not surprising, considering the steady rise in life expectancy over the past few decades.  Medicare’s eligibility age, however, has not changed — it’s still 65.  And if you don’t sign up for Medicare as soon as you turn 65, you may have to pay a significantly higher monthly rate for the rest of your life, once you do enroll.

One major exemption from that penalty is if you’re still working for an employer with at least 20 employees and you’re on their health plan.  Or else married to someone who’s still working and you’re on your spouse’s plan.  Without that exemption, you’ll pay 10% more for Medicare Part B for each year that you delayed signing up.  And you’ll continue paying that higher rate permanently.

There are numerous widespread misconceptions about additional ways to safely delay signing up, without incurring a penalty.  Here are some of the most common ones:

  • I’m 67, and I stopped working a little more than a year ago.I was on my employer’s health plan until I was laid off.My COBRA coverage began right away, so there was no gap in coverage.Once my COBRA coverage ends in another few months, I’ll sign up on Medicare.

  • I’m 68.I retired from teaching at 65, and have not worked since.I have 40 credits, but I haven’t signed up for Medicare yet because my district is giving me very inexpensive post-retirement health insurance for my first four years of retirement.Once that ends, I’ll sign up on Medicare.

  • I’m single and I retired from teaching six years ago.Since then I‘ve been working elsewhere, part-time, trying to get my 40 credits.(I had less than 20 when I retired.)I still get my health insurance from my former school district.I’m 68 now and I just reached 40 credits this month. I’m thrilled.I’m going to go sign up for Medicare immediately, now that I’m finally eligible.

  • I’m 66, retired, and will never have the 40 credits necessary to qualify for Medicare.However, I’m married to someone who does.He’s almost 61 now.When he turns 62 next year, I’ll become eligible for Medicare and sign up, based on his work record.

Unfortunately, all of the above retirees will be saddled with a late enrollment penalty, for life.  In the first two examples, the retirees do not meet both halves of the exemption requirement.  It’s not enough to simply be on your employer’s health plan.  You also still need to be working for that employer.  Because neither of them signed up when they initially stopped working, the person in the first example will have to pay an extra 10% every month for Medicare Part B, for the rest of his life, and the person in the second example will have to pay an extra 30%.  Or 40%, if she follows her stated plan and waits another year to enroll. 

The retirees in the final two examples, who didn’t enroll in Medicare Part B at 65 because they assumed they weren’t yet eligible, will also have to pay a lifetime late enrollment penalty.  Sadly, it’s a little-known fact that anyone can purchase Medicare B at 65, whether you have 40 credits or not.  The monthly cost is exactly the same as it is for someone who has 40 credits.  Later on, if and when you finally attain 40 credits — or when your spouse who has 40 credits reaches age 62 — you can sign up for Medicare A, which will be free and will not have a late enrollment penalty.

Medicare enrollment can be tricky to navigate.  People’s situations vary widely.  If you’d like us to look at yours, we’d be happy to go over it carefully with you at your next review.