Let’s begin with Medicare Part A. Part A is premium-free if you or your spouse worked and paid taxes for ten years or more. If you are not eligible for premium-free Part A and you delay enrolling, you will be assessed a 10% penalty. You will be charged the penalty for twice the number of years you could have had Part A, but didn’t sign up.
Not enrolling in Medicare Part B when you first become eligible will result in a penalty of 10% of the Part B premium for every 12 months you put off signing up. In most case, you will pay the penalty as long as you have Part B coverage.
There is an exception. You are not required to take Part B if you or your spouse is still working and you have coverage as a result of that employment. Once this qualifying insurance ends, you and your spouse would be able to enroll without penalties.
The late enrollment penalty for Medicare Part D depends on how long you go without Part D or other creditable prescription drug coverage. Medicare calculates the penalty by multiplying 1% of the ‘national base beneficiary premium’ ($35.63 in 2017; $35.02 in 2018) times the number of full, uncovered months you did not have Part D or creditable coverage. You will pay this penalty for as long as you are enrolled in a Medicare Part D plan.
It is important to understand the period when you first become eligible for Medicare so you can avoid these penalties. If you qualify for Medicare by age, it starts three months before you turn 65 and lasts for a total of seven months.