Medicare Part B Penalties and SEPs
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Medicare Part B penalties and SEPs can feel confusing, but the rules are straightforward once you know what triggers a surcharge and what qualifies you for a penalty-free enrollment. Below we break down how the Part B late-enrollment penalty works, when Special Enrollment Periods (SEPs) apply with employer coverage, and the practical steps to protect yourself from lifetime costs.
Avoid Medicare Part B Penalties
Check timing, confirm SEP eligibility, and prevent permanent premium surcharges.
What is the Part B late-enrollment penalty?
When Medicare Part B penalties apply and when they don’t
Part B penalties can apply if you skip enrollment during your Initial Enrollment Period (around age 65) and you don’t have a qualifying reason to delay. The most common qualifying reason is active employer group coverage from your own or your spouse’s current job at a company with 20+ employees.
If that applies, you can often delay Part B and later use a Special Enrollment Period to sign up penalty-free after the job or coverage ends.
How the Part B penalty is calculated
Medicare Part B penalties and SEPs—simple math you can use
- Amount: 10% of the standard Part B premium for each full 12-month period you could have had Part B but didn’t sign up.
- Duration: The surcharge generally lasts as long as you have Part B.
- When it begins: The penalty starts when Part B coverage starts.
Example: You turned 65 in June 2022, had no qualifying employer coverage, and enrolled in February 2025. That’s two full 12-month periods late → a 20% penalty added to the standard premium going forward.
Medicare Part B SEPs: who qualifies
Special Enrollment Periods for workers and spouses
You may qualify for a Part B SEP if you or your spouse had active employment-based group coverage after turning 65. The SEP is generally available for at least 8 months from the earlier of (1) when employment ends or (2) when employer coverage ends. Enroll during this window to avoid the penalty.
Important: COBRA and retiree coverage typically do not count as active employment for Part B SEPs. Marketplace plans also don’t create a Part B SEP.
Employer coverage and creditable rules
Medicare Part B penalties and SEPs with job-based plans
Large employer plans (often 20+ employees) are typically the scenario where delaying Part B is most commonly allowed without penalties. If your employer has fewer than 20 employees, Medicare is often primary—so delaying Part B can lead to claim denials and later penalties.
If you’re unsure, confirm employer size and primary payer rules with HR in writing.
If you’re coordinating timing with Social Security, review how Medicare and Social Security work together.
Key timelines, forms, and documentation
Using the Part B SEP without delays
To use the Part B SEP, Social Security typically requests documentation showing active employer coverage after 65. Two commonly used forms are:
- CMS-40B: Application for Enrollment in Medicare Part B
- CMS-L564: Request for Employment Information (completed by your employer)
Ask HR for verification early so you’re not rushed during retirement or coverage transitions.
Realistic examples by situation
Medicare Part B penalties and SEPs in practice
- Working past 65 at a large employer: Keep employer coverage, delay Part B, retire at 67, enroll during the SEP → no penalty.
- COBRA after retirement: COBRA isn’t active employment; delaying Part B can trigger penalties → plan Part B timing carefully.
- Small employer coverage: If your employer is under 20 employees, Medicare is often primary → enrolling at 65 is commonly the safest path.
- Delaying for an HSA: Coordinate carefully—Part A timing can affect HSA eligibility when you start Medicare or Social Security.
Taxes, IRMAA, and timing choices
Coordinating premiums, income brackets, and surcharges
Part B premiums can be higher for high-income households due to IRMAA (Income-Related Monthly Adjustment Amount). While IRMAA is separate from late-enrollment penalties, timing income events may reduce overall Medicare costs for some households.
Common mistakes to avoid
Prevent permanent Medicare Part B surcharges
- Assuming COBRA or retiree coverage creates a Part B SEP (it usually doesn’t).
- Assuming Marketplace plans create a Part B SEP (they typically don’t).
- Missing the SEP window after employment ends—start paperwork early.
- Not confirming employer size and primary payer rules with HR.
- Waiting until claims are denied to address Medicare enrollment.
Get help with Medicare Part B penalties and SEPs
Talk with a licensed advisor—free and friendly
We’ll confirm SEP eligibility, estimate potential penalties, and map the best Part B start date—so you can enroll with confidence.
- Review options on our Medicare services page
- Reach our team via our contact page
Want a Part B Timing Review?
We’ll confirm if deemed “creditable” coverage applies, document your SEP, and prevent permanent premium penalties.
Related Pages
FAQs: Medicare Part B penalties and SEPs
What triggers the Medicare Part B late-enrollment penalty?
You can be penalized if you delay Part B past your Initial Enrollment Period and you don’t have qualifying active employer group coverage (yours or a spouse’s) that allows a Special Enrollment Period.
How much is the Part B penalty and how long does it last?
The penalty is generally 10% of the standard Part B premium for every full 12-month period you delayed without a qualifying reason, and it typically lasts as long as you have Part B.
What is a Special Enrollment Period (SEP) for Part B?
A Part B SEP is a window that lets you enroll in Part B without a penalty when you delayed because you had active employer group coverage after 65 and then that job or coverage ended.
Does COBRA or retiree coverage qualify me for a Part B SEP?
Usually no—COBRA and retiree coverage are not treated as active employment for Part B SEPs, so delaying Part B on COBRA alone can lead to penalties.
How long is the Part B SEP window?
The Part B SEP is generally available for at least 8 months after the earlier of when employment ends or when the employer coverage ends, so it’s best to start paperwork before coverage stops.
What forms do I usually need to enroll during a Part B SEP?
Commonly requested forms include CMS-40B (Part B enrollment) and CMS-L564 (employer verification of coverage), with the employer completing the L564.
Does employer size matter if I’m still working at 65?
Yes—if your employer has fewer than 20 employees, Medicare is often primary, and delaying Part B may cause claim issues and penalties, so confirm payer rules with HR in writing.
Can a Part B penalty be removed once it’s applied?
Most Part B penalties are effectively permanent while you have Part B, though rare exceptions may apply if you can document misinformation or qualifying circumstances through a formal review process.
About the Author:
Tonia Pettitt, CMIP©, is a seasoned Medicare specialist with more than 40 years of hands-on experience guiding individuals and families through the complexities of Medicare planning. As a senior advisor with the nationally licensed independent agency Diversified Insurance Brokers, Tonia provides clear, dependable guidance across all areas of Medicare—including Medicare Advantage, Medicare Supplement (Medigap), and Part D prescription coverage. Leveraging active contracts with dozens of highly rated insurance carriers, she helps clients compare options objectively and secure the most suitable coverage for their health and budget.
Known for her patient, education-first approach, Tonia has built a reputation as a trusted resource for retirees seeking reliable, unbiased Medicare support. With four decades of experience across evolving Medicare laws, carrier changes, and plan structures, she brings unmatched insight to every client conversation—ensuring clients feel confident, protected, and fully prepared for each stage of their retirement healthcare journey.
