Enrolling late in Medicare Parts B and D can lead to permanent penalties. Here are some examples:
Part B Late Enrollment Penalty: You may be charged a penalty if you don't sign up for Part B when you first become eligible. This penalty adds 10% to your monthly premium for each year you could have had Part B but didn't sign up for it. This increased premium continues for as long as you have Part B. Essentially, if you wait two years to enroll after becoming eligible, your monthly premium could be 20% higher than it otherwise would have been.
Part D Late Enrollment Penalty: For Part D, which covers prescription drugs, the penalty is calculated if you go without Part D or other credible prescription drug coverage for any continuous period of 63 days or more after your initial eligibility period is over. The cost of this penalty is 1% of the "national base beneficiary premium" ($32.74 in 2023, for example) multiplied by the number of full months you were eligible but didn't have Part D or credible coverage. This extra amount is then added to your Part D premium each month.
To avoid these penalties, it’s critical to sign up during your initial eligibility period unless you have other qualifying healthcare coverage. These penalties are designed to encourage people to sign up when they are first eligible and to maintain continuous coverage.