3 Medicare Penalties and How to Avoid Them

Medicare penalties are something we HATE to see our clients go through! These penalties can be avoided, but first, you’ve got to know what they are. Some are more common than others, but we’re going to walk you through each of them so you can avoid every single one.

Medicare Part A Penalty

The Part A penalty is the one we see least often as it only applies to those who have not qualified for premium-free Part A.

As long as you’ve worked for ten years (or 40 quarters) and paid Medicare taxes during that time, you won’t pay a premium for Medicare Part A. If that’s the case, you can sign up as early as age 65, but you won’t get a penalty for enrolling later. (But why wait if it’s premium-free!?)

If you do not qualify for premium-free Part A, your premium could be as high as $506 in 2023. But that’s not the penalty. The penalty happens if you delay Part A enrollment after you become eligible at age 65.

If you delay enrollment, you’ll be penalized 10% of your Part A premium. If you’re already on the hook for the full $506 per month, that will raise your premium to $556.60. You will pay this additional premium for twice the number of years you delayed Part A enrollment.

Avoiding the Part A Penalty

If you or your spouse has other creditable insurance coverage (more on that in a moment), then you can delay your Part A enrollment. This may be a wise decision if you do not yet qualify for premium-free Part A as you’ll be earning quarters towards your premium-free Part A eligibility if you are still employed.

ref throwing penalty flag

What Is Creditable Insurance?

Enrollment in Original Medicare – Parts A and B – can be postponed without penalty if you are covered under another creditable insurance. An insurance plan is deemed “creditable” if it offers equal or better coverage than Medicare Parts A and B.

We often see creditable insurance in the form of a large employer’s group health plan. As long as your employer has at least 20 employees, your coverage is creditable. In any other instance, you should check with your benefits manager to find out the status of your coverage.

To learn more about how an employer’s coverage applies to Medicare, click here.

Medicare Part B Penalty

This penalty is similar to the Part A penalty. It will apply to anyone who does not enroll in Part B as soon as they are eligible, unless they have other creditable insurance.

The penalty applies to those who delay enrollment for 12 months or longer. This penalty is also an additional 10% of your Part B premium. The Part B premium in 2023 is $164.90, so a 10% penalty would bring your monthly premium up to $181.39. You’ll incur an extra 10% for each of the 12-month periods that you delayed coverage.

Unlike the Part A penalty, this one never goes away. If you incur this penalty, you’ll have to pay it for life.

Medicare Part D Penalty

Now this is a penalty we see too often, but it’s easy to see why so many people don’t avoid it.

As you know, Part D holds your prescription drug coverage. People who aren’t taking prescription medications assume that there is no need for them to get a Part D plan. That’s where the trouble starts.

Just like Medicare A and B, you have to enroll in a Part D plan as soon as you are eligible to avoid the penalty. The penalty applies after not having coverage for 63 days. The rules about creditable coverage also apply, though the requirements are a little different for Part D creditable coverage.

The Part D penalty is calculated by multiplying 1% of the national base beneficiary premium by the number of months you did not have creditable prescription coverage and were not enrolled in Medicare Part D. In 2023, the national base beneficiary premium was $32.74.

The Part D penalty doesn’t usually amount to a large sum, but like the Part B penalty, it stays with you for life.

What is Creditable Insurance for Part D?

These are the qualifications for prescription drug coverage to be creditable:

  • Pays 60% or more of the prescription cost;
  • Covers generic and brand-name drugs;
  • Includes coverage at multiple pharmacies; and
  • Doesn’t have a cap amount OR has a low deductible

We hope that knowing about the penalties will help you avoid them. Healthcare can get expensive enough, so we don’t want to see these avoidable fees added to your expenses. If you have questions about delaying Medicare enrollment call the advisors at Sunflower Insurance Solutions.

Dani is a licensed health and life insurance advisor. She is also the creator of everything you see on our social media accounts and runs Blaze Creative, a content-writing and copywriting agency designed specifically for Medicare brokers.


  1. Lorna Klosowski on December 29, 2021 at 8:40 pm

    We’re a group of volunteers and starting a new scheme in our community. Your website offered us with valuable information to work on. You’ve done a formidable job and our whole community will be thankful to you.

Leave a Comment