Medicare Enrollment Mistakes That Cost You Money for Life

Most Medicare mistakes aren’t about choosing the wrong plan. They’re about missing a deadline, misunderstanding a rule, or making an assumption that turns out to be wrong.

And here’s the painful part: many of these mistakes are permanent. The federal government doesn’t have a “I didn’t know” exception. A penalty you incur at 65 can follow you for the rest of your life — adding hundreds or even thousands of dollars to your healthcare costs every single year.

After 18+ years of working exclusively in Medicare, I’ve seen every version of these mistakes. The retiree who thought COBRA would protect them. The couple who kept contributing to their HSA without realizing Medicare made those contributions illegal. The person who skipped Part D because they didn’t take any medications — and got hit with a penalty when they finally enrolled. If you’re new to Medicare overall, our Medicare for Dummies 2026 guide covers the full picture before diving into enrollment specifics.

None of these mistakes are hard to avoid. You just need to know the rules before you hit 65 — not after.

This guide covers the eight most costly Medicare enrollment mistakes people make, what they actually cost in real dollars, and exactly how to avoid every one of them.

Key Takeaways

  • The Part B late enrollment penalty is 10% of your premium for every 12 months you delayed — permanently. At $202.90/month in 2026, two years of delay costs an extra $40.58 every month for life.
  • COBRA does not count as creditable coverage for Medicare Part B. If you retire at 65, take COBRA, and skip Medicare enrollment, your penalty clock is already running.
  • The Part D late enrollment penalty is 1% of the national base beneficiary premium ($38.99 in 2026) per uncovered month — permanently. Even if you take no medications, skipping Part D enrollment is a costly mistake.
  • Your Medigap guaranteed issue window lasts only six months from your Part B effective date. Miss it and you may face medical underwriting — or be denied coverage entirely.
  • If you have an HSA and delay Medicare enrollment past 65, Part A may be retroactively applied up to six months — making any HSA contributions during that period subject to a 6% IRS excise tax penalty.
  • The marketplace coverage trap: if you have ACA marketplace coverage with subsidies, those subsidies end the moment you become eligible for premium-free Part A at 65 — whether you enroll or not.
  • Working with an independent Medicare broker eliminates most of these risks. It costs you nothing and takes about 15 minutes.

Table of Contents

  1. Mistake #1: Missing Your Initial Enrollment Period
  2. Mistake #2: The COBRA Trap — The Most Expensive Misunderstanding in Medicare
  3. Mistake #3: Skipping Part D Because You Don’t Take Medications
  4. Mistake #4: Missing Your Medigap Guaranteed Issue Window
  5. Mistake #5: The HSA Trap — Contributing After Medicare Kicks In
  6. Mistake #6: Confusing Retiree Coverage for Creditable Coverage
  7. Mistake #7: The Marketplace Coverage Trap
  8. Mistake #8: Not Reviewing Your Plan Every Year
  9. What These Mistakes Actually Cost — In Real Dollars
  10. How to Protect Yourself
  11. Frequently Asked Questions

Mistake 1: Missing Your Initial Enrollment Period

Your Initial Enrollment Period (IEP) is the most important Medicare deadline you’ll ever face. It’s a 7-month window centered around your 65th birthday:

 

  • 3 months before your birthday month
  • Your birthday month
  • 3 months after your birthday month

 

Miss this window without qualifying coverage elsewhere, and the consequences are both immediate and permanent.

 

What happens if you miss it:

 

You cannot enroll in Medicare Part B until the next General Enrollment Period (January 1 – March 31). Your coverage won’t start until July 1 of that year — leaving you potentially without medical coverage for months.

 

And then the penalty kicks in.

 

The Part B late enrollment penalty: For every full 12-month period you were eligible for Part B but didn’t enroll, your monthly premium increases by 10% — permanently. At the 2026 standard rate of $202.90/month:

 

  • 1 year late: +$20.29/month → $223.19/month
  • 2 years late: +$40.58/month → $243.50/month
  • 3 years late: +$60.87/month → $263.77/month

 

That extra cost follows you every month for the rest of your life. Over a 20-year retirement, two years of delay can cost you nearly $10,000 in unnecessary premium payments — from one missed deadline. You can verify the current penalty structure directly at medicare.gov.

 

How to avoid it: Mark your IEP dates on your calendar the moment you turn 64. If you’re not receiving Social Security benefits, you’ll need to actively enroll at ssa.gov or at your local Social Security office. It won’t happen automatically.

Mistake 2: The COBRA Trap — The Most Expensive Misunderstanding in Medicare

This is the single most common — and most costly — Medicare enrollment mistake I see. And it happens to smart, well-prepared people all the time.

 

Here’s the scenario: You retire at 65. Your employer offers you COBRA coverage — the ability to continue your employer health plan for up to 18 months. You think: “Great. I have health insurance. I’ll hold off on Medicare until COBRA runs out.”

 

That reasoning is wrong. And it can cost you for life.

 

Why COBRA is a trap:

 

COBRA does not count as creditable coverage for Medicare Part B purposes. The moment your active employment ends, your 8-month Special Enrollment Period (SEP) clock starts ticking — regardless of whether you elect COBRA.

 

If you take COBRA and wait for it to run out before enrolling in Medicare, you will likely have missed your SEP entirely. At that point, you’ll have to wait for the next General Enrollment Period (January–March), your coverage won’t start until July, and you’ll owe a permanent Part B late enrollment penalty for every year you went without coverage.

 

A real example: You retire in June 2026. You elect 18 months of COBRA. Your SEP runs from June 2026 through January 2027 (8 months). If you don’t enroll in Medicare Part B by January 2027 — even though your COBRA coverage is still active — you’ve missed your window. You’ll wait until January 2028 for GEP, with July 2028 coverage — and owe a penalty for the entire time in between.

 

The important exception: Retiree drug coverage under COBRA may or may not be creditable for Part D purposes. Ask your COBRA plan administrator in writing whether your drug coverage is creditable for Medicare Part D. They are legally required to provide you with a “Notice of Creditable Coverage” annually. If it is creditable, you can delay Part D without penalty until COBRA ends.

 

How to avoid it: When you leave active employment, enroll in Medicare Parts A and B immediately. You can keep COBRA for dental, vision, or spouse coverage — but enroll in Medicare for your core medical coverage. Don’t let COBRA substitute for Medicare enrollment.

Mistake 3: Skipping Part D Because You Don't Take Medications

This one is counterintuitive — and it catches people off guard constantly.

 

You’re 65, healthy, and don’t take any prescription medications. So you figure: why pay for Part D drug coverage I don’t need?

 

Here’s why: the Medicare Part D late enrollment penalty is based on how long you go without creditable drug coverage — not on whether you actually needed the coverage.

 

How the penalty works:

 

The penalty is calculated as 1% of the national base beneficiary premium for every month you went without creditable drug coverage. In 2026, the national base beneficiary premium is $38.99, as confirmed by the National Council on Aging.

 

So: 1% × $38.99 × number of uncovered months = your monthly penalty — permanently.

 

Real dollar examples:

 

  • 12 months without coverage: 12% × $38.99 = $4.70/month added permanently
  • 24 months without coverage: 24% × $38.99 = $9.40/month added permanently
  • 43 months without coverage: 43% × $38.99 = $16.80/month added permanently

 

These amounts seem small individually — but they compound. Over 20 years, 24 months of uninsured gap costs you over $2,200 in extra premiums. And since the penalty recalculates annually based on the current base premium — which tends to rise — the actual lifetime cost grows over time.

 

The bigger risk:

 

If you develop a health condition at 70 and suddenly need expensive medications, you’ll pay full price until the next enrollment period — and then pay the penalty on top of your premium for the rest of your life.

 

How to avoid it: Always enroll in a Part D plan when you first become eligible — even if it’s the lowest-cost plan available in your area. The protection is worth far more than the premium.

Mistake 4: Missing Your Medigap Guaranteed Issue Window

This is the mistake that most agents don’t explain clearly enough — and that has the longest-lasting consequences.

 

When you first enroll in Medicare Part B, you have a 6-month Medigap Open Enrollment window — starting the first day your Part B coverage is effective. During this window, every insurance company selling Medigap plans in your state must:

 

  • Accept your application
  • Charge you the standard rate for your age
  • Cover you regardless of your health history

 

No health questions. No underwriting. No denials.

 

This window is guaranteed by federal law. And it only comes around once.

 

What happens when you miss it:

 

Outside of this window and specific state-protected situations, Medigap insurers can — and often do — ask health questions and deny your application based on your medical history. The older you get and the more health conditions you develop, the harder it becomes to qualify for a Medigap plan.

 

In most states, once you’re past your guaranteed issue window without a qualifying event, you may be unable to get a Medigap plan at all if you have significant health conditions.

 

The 12-month trial right:

 

There is one important protected window many people don’t know about: if you enroll in a Medicare Advantage plan for the first time at 65 and decide within the first 12 months that it’s not right for you, you have a guaranteed right to switch to any Medigap plan — without underwriting. This trial right exists only once, at your first enrollment.

 

New York exception:

 

If you live in New York, you have year-round guaranteed issue — you can apply for Medigap at any time without underwriting, regardless of health status. This is an exceptional consumer protection that most states don’t offer.

 

How to avoid it:

 

Enroll in your Medigap plan during your 6-month guaranteed issue window. Don’t wait until you’re sick to think about supplemental coverage — by then, it may be too late to qualify. When you’re ready to choose a carrier, our guide on how to check a Medicare Supplement company’s financial strength will help you pick the right one.

 

Mistake 5: The HSA Trap — Contributing After Medicare Kicks In

This one surprises almost everyone — and it carries an IRS tax penalty on top of a Medicare compliance issue.

 

If you have a Health Savings Account (HSA) and are still contributing to it, you need to stop making contributions before you enroll in Medicare. Here’s why.

 

The rule: Once you’re enrolled in any part of Medicare — including Part A — you are no longer eligible to contribute to an HSA. Any contributions made after your Medicare enrollment are considered “excess contributions” by the IRS, subject to a 6% excise tax penalty for every year the excess remains in the account.

 

The retroactive trap:

 

Here’s where it gets tricky. When you enroll in Medicare Part A after age 65, your coverage can be applied retroactively for up to six months — but never before your 65th birthday.

 

This means if you enroll in Medicare in October and your Part A is retroactively applied to April, any HSA contributions you made from April through September are now excess contributions — even though you didn’t know you were technically enrolled yet.

 

A real example: You’re 67 and plan to retire in June 2026. In January 2026, you fully fund your HSA ($4,400 for 2026). When you enroll in Medicare in June 2026, Part A is retroactively applied to December 2025. Your entire 2026 HSA contribution is now excess — and subject to a 6% annual penalty until corrected.

 

How to avoid it:

 

Stop making HSA contributions at least 6 months before you plan to enroll in Medicare or apply for Social Security benefits (which triggers automatic Part A enrollment). Mark this date on your calendar well in advance.

 

If you accidentally contribute after your Medicare enrollment begins, work with your HSA administrator promptly to withdraw the excess amount and any earnings before your tax filing deadline to minimize the penalty.

Mistake 6: Confusing Retiree Coverage for Creditable Coverage

Many people leave their job with retiree health benefits — coverage their former employer provides in retirement. They assume this coverage protects them from Medicare enrollment penalties the same way active employer coverage does.

 

Often, it doesn’t.

 

The distinction:

 

Active employer coverage — health insurance tied to current employment at a company with 20+ employees — qualifies you for a Special Enrollment Period and protects you from Part B penalties.

 

Retiree health coverage — insurance provided by a former employer after you’ve stopped working — is generally not considered active employer coverage for Medicare purposes. In most cases, you should enroll in Medicare at 65 even if you have retiree benefits, because Medicare typically becomes your primary insurance.

 

What to ask before assuming:

 

Contact your former employer’s HR or benefits department and ask two specific questions:

 

  1. “Is my retiree health coverage considered creditable for Medicare Part B?”
  2. “Is my retiree prescription drug coverage considered creditable for Medicare Part D?”

 

Get the answers in writing. Keep the documentation. The answers will determine whether you need to enroll at 65 or whether you have more flexibility.

 

The important nuance:

 

Some employer retiree plans are specifically designed to wrap around Medicare — meaning they expect you to have Medicare as primary coverage and pay second. Enrolling in Medicare actually activates the full value of these plans. Not enrolling can leave you with unexpected gaps and penalties.

Mistake 7: The Marketplace Coverage Trap

If you purchased health coverage through the ACA marketplace (Healthcare.gov) and you’re receiving premium tax credits (subsidies), there’s something critically important to understand as you approach 65.

 

The rule:

 

The moment you become eligible for premium-free Medicare Part A — which happens automatically when you turn 65 if you have 40+ work quarters — you are no longer eligible for marketplace premium tax credits, even if you haven’t yet enrolled in Medicare.

 

This catches people completely off guard. Your subsidy eligibility ends whether or not you’ve actually signed up for Medicare. If you continue receiving subsidies after your Part A eligibility begins, you may owe them back at tax time.

 

What to do:

 

As you approach 65, contact your marketplace plan and notify them of your Medicare eligibility. Enroll in Medicare during your IEP to ensure seamless coverage and avoid any subsidy repayment issues.

Mistake 8: Not Reviewing Your Plan Every Year

This mistake is less about enrollment and more about complacency — and it costs people real money every year.

 

Medicare plans change annually. Premiums go up. Drug formularies change. Doctors leave networks. Benefits that existed this year disappear next year.

 

The Annual Enrollment Period (AEP) — October 15 through December 7 — exists specifically so you can review your coverage and make changes for the coming year. Every Medicare beneficiary should be doing this review every single year, not just when they first enroll.

 

What to review each AEP:

 

  • Part D: Check whether your current medications are still covered at the same tier. Compare your current plan to alternatives using Medicare’s Plan Finder at medicare.gov/plan-compare.
  • Medicare Advantage: Read your Annual Notice of Change (ANOC), mailed in late September. Check whether your doctors are still in-network, whether your drug coverage has changed, and whether the premium and out-of-pocket maximum have shifted.
  • Medigap: Compare your current premium against what comparable A-rated carriers are offering. If your rate has increased significantly, it may be worth exploring alternatives — especially if you’re still in good health.

 

One thing most people don’t do:

 

If you’re on a Medigap plan, compare the rate increase you received this year against what other carriers are charging for the same plan. Rate increases vary significantly by carrier. If your carrier raised rates 18% and a comparable A-rated carrier is offering the same Plan G for 25% less, that’s real money worth acting on — while you can still qualify medically.

What These Mistakes Actually Cost — In Real Dollars

Let’s put this all together with actual numbers so the stakes are clear:

Mistake

Annual Cost

Lifetime Cost (20 years)

Part B penalty — 1 year late

+$243/year

+$4,860

Part B penalty — 2 years late

+$487/year

+$9,740

Part B penalty — 3 years late

+$730/year

+$14,600

Part D penalty — 24 months uncovered

+$113/year

+$2,260+

Part D penalty — 43 months uncovered

+$202/year

+$4,040+

HSA excess contribution (6% IRS penalty)

6% of excess per year until corrected

Varies

Medigap missed window (uninsurable)

Cost of uncovered care

Potentially unlimited

How to Protect Yourself

The single most effective thing you can do to avoid every mistake on this list is to start planning 6 to 9 months before your 65th birthday — not 6 weeks.

Your pre-65 checklist:

☐ Confirm your IEP dates (3 months before your birthday month)

 

☐ If you have employer coverage, confirm in writing whether it’s creditable for Part B and Part D

 

☐ If you have COBRA or retiree coverage, confirm exactly how Medicare interacts with it — don’t assume

 

☐ If you have an HSA, stop contributions at least 6 months before enrolling in Medicare or applying for Social Security

 

☐ If you have ACA marketplace coverage with subsidies, notify your marketplace plan of your upcoming Medicare eligibility

 

☐ Enroll in Medicare Parts A and B during your IEP

 

☐ Enroll in a Medigap plan during your 6-month guaranteed issue window

 

☐ Enroll in a Part D plan even if you don’t take medications

 

☐ Set a calendar reminder every October 15 for your annual plan review

Work with an independent Medicare broker. A Medicare-only broker who represents 40+ carriers will walk you through every one of these decisions, confirm your specific situation, and make sure you don’t miss a deadline or make a costly assumption. It costs you nothing — brokers are compensated by the carriers when you enroll, and your premium is the same regardless.

Frequently Asked Questions

Note: Part D penalty amounts recalculate annually based on the base beneficiary premium, which typically increases over time — meaning lifetime costs grow.

You’ll likely have to wait until the General Enrollment Period (January 1 – March 31) to enroll in Part B, with coverage starting July 1. You’ll also face a permanent Part B late enrollment penalty of 10% for every full 12-month period you delayed. The gap in coverage and the permanent premium increase make missing your IEP one of the most costly Medicare mistakes possible.

No — not for Part B. COBRA does not protect you from the Part B late enrollment penalty. Your 8-month Special Enrollment Period starts when your active employment ends, regardless of whether you elect COBRA. However, COBRA drug coverage may or may not be creditable for Part D — you must get written confirmation from your plan administrator to know for sure.

 The penalty is 10% of the standard Part B premium for every full 12-month period you were eligible but didn’t enroll. In 2026, the standard Part B premium is $202.90/month. One year late means an extra $20.29/month — permanently. Two years late means an extra $40.58/month — permanently.

The penalty is 1% of the national base beneficiary premium ($38.99 in 2026) for every month you went without creditable drug coverage. The monthly penalty is rounded to the nearest $0.10 and added to your Part D premium permanently. For 24 months without coverage, that’s approximately $9.36 added to your monthly premium for life.

Stop making HSA contributions at least 6 months before you plan to enroll in Medicare or apply for Social Security benefits. This is because Medicare Part A can be applied retroactively for up to 6 months after enrollment. Any contributions made during retroactive Medicare months are considered excess contributions subject to a 6% IRS excise tax penalty annually until corrected.

It’s the 6-month period starting on the date your Medicare Part B becomes effective. During this window, every Medigap insurer must accept your application at standard rates without health questions or medical underwriting. This window comes around once — missing it can mean being denied Medigap coverage entirely if you develop health conditions.

In most states, you can apply at any time — but outside of protected windows, the insurer can ask health questions and may decline your application. New York is an exception — it offers year-round guaranteed issue, meaning you can switch or enroll at any time without underwriting. A handful of other states have birthday rules or similar protections that create annual windows.

 If your employer has 20 or more employees and you’re covered under active employer health insurance, you can delay Medicare enrollment without penalty. Once that coverage ends, you have 8 months to enroll under a Special Enrollment Period. Keep documentation of your employer coverage in case Social Security asks for proof.

 Generally no. Retiree health coverage from a former employer typically does not qualify as creditable coverage for avoiding the Part B penalty the way active employer coverage does. You should enroll in Medicare at 65 even if you have retiree benefits, and confirm with your plan how Medicare coordinates with your retiree coverage.

Medicare penalties are permanent. Medicare deadlines are firm. And the assumptions that seem reasonable — COBRA will protect me, I don’t need drug coverage yet, my retiree plan handles everything — are the exact assumptions that lead to the most expensive mistakes.

The good news: every mistake in this guide is entirely avoidable with the right information at the right time. That’s why starting your Medicare planning 6 to 9 months before your 65th birthday — not 6 weeks — makes such a meaningful difference.

Medicare foundation, our guide on what Medicare actually covers and what it doesn’t is a great next read. A 15-minute conversation can protect you from a lifetime of unnecessary expenses.

Call 631-358-5793 or visit paulbinsurance.com to schedule your free consultation.

Paul Barrett is the founder and Principal Agent of The Modern Medicare Agency, a Medicare-only independent brokerage based in Melville, NY. With 18+ years of Medicare-exclusive experience, licensure in 34 states, and relationships with 40+ carriers, Paul has helped 5,000+ clients navigate Medicare with clarity and confidence. He is the author of Medicare Mastery Unlocked.

If you’d like to walk through your specific situation — your employer coverage, your HSA, your timeline, your plan options — I’m happy to do that at no cost. And if you’re still building your

paulbinsurance.com | 631-358-5793 | medicare@paulbinsurance.com



What Is Medicare Part B and What Does It Actually Cover?

The complete guide to Medicare’s medical insurance — every service it covers, exactly what it costs in 2026, how it works with group insurance and VA benefits, and the excess charges most people have never heard of until they get a surprise bill.

The Short Answer

Medicare Part B is medical insurance — it covers doctor visits, outpatient care, preventive services, durable medical equipment, and more. Unlike Part A, Part B is not premium-free for anyone: everyone pays a monthly premium (202.90in2026formostpeople),anannualdeductible(283), and 20% coinsurance on most covered services, with no yearly cap on that 20% under Original Medicare alone. Whether you need to enroll at 65, and whether delaying is safe, depends heavily on your employment status and your employer’s size — getting this wrong is one of the most consequential and permanent mistakes in all of Medicare.

Key Takeaways

  • Part B is never premium-free — everyone pays a monthly premium, and higher earners pay significantly more through IRMAA.
  • The 20% coinsurance under Original Medicare alone has no yearly cap — this is the single biggest financial risk in Medicare, and it’s the reason Medigap and Medicare Advantage exist.
  • Whether you can safely delay Part B without a penalty depends on your employer’s size: 20+ employees generally allows delay; fewer than 20 generally does not.
  • Missing your enrollment window triggers a permanent 10% penalty for every 12-month period you went without coverage.
  • Veterans can and generally should enroll in Part B even with VA benefits, since Medicare and VA coverage don’t coordinate — each only pays for care received within its own system.
  • “Excess charges” from non-participating providers can add up to 15% on top of what Medicare approves, and only some Medigap plans protect you from them.

What Part B Actually Covers

While Part A handles hospital room and board, Part B is the half of Original Medicare that covers medical care and most services delivered outside a hospital admission — doctor visits, outpatient procedures, and ongoing medical needs.

What’s covered

  • Doctor visits — primary care and specialists
  • Outpatient surgeries and procedures
  • Diagnostic lab work, X-rays, and MRIs
  • Emergency room visits
  • Ambulance services
  • Outpatient mental health care
  • Physical, occupational, and speech therapy
  • Chemotherapy and radiation received in an outpatient clinic
  • Durable Medical Equipment (DME) — wheelchairs, oxygen equipment, blood sugar monitors, walkers, and similar equipment
  • Ambulatory surgical center services

Preventive services: the part Medicare gets genuinely right

Most preventive services are covered at 100%, with no deductible and no copay, as long as your provider accepts Medicare assignment. This includes:

  • Your one-time “Welcome to Medicare” wellness visit, available within your first 12 months on Part B
  • Annual wellness visits after that
  • Flu shots and most other recommended vaccines
  • Mammograms
  • Colonoscopies and other cancer screenings
  • Diabetes and cardiovascular screenings
  • Many other screenings recommended by the U.S. Preventive Services Task Force

Paul’s Honest Take: This is one of the most underused parts of Medicare, full stop. I’ve had clients who paid for a private physical every year out of habit and never realized their annual wellness visit through Medicare was completely free. If you haven’t used your Welcome to Medicare visit or your annual wellness visit, that’s real value sitting on the table.

What’s NOT covered

  • Routine dental care — cleanings, fillings, dentures, extractions
  • Routine vision exams and eyeglasses
  • Hearing aids (though diagnostic hearing tests ordered by a doctor may be covered)
  • Long-term custodial nursing home care — help with daily living activities, as opposed to short-term skilled or medical care
  • Routine prescription drugs you pick up at a retail pharmacy — that’s Part D’s job, not Part B’s
  • Cosmetic surgery, unless medically necessary (such as reconstruction after an accident or mastectomy)
  • Most care received outside the United States, with very limited exceptions
  • Routine foot care, such as nail trimming, in the absence of a qualifying medical condition
  • Acupuncture, except for a narrow, specific chronic low back pain benefit
  • Concierge medicine fees and membership-style charges some practices add on top of standard care
  • Long-term care insurance-style services, including most home-based personal care that isn’t tied to a skilled medical need

Paul’s Honest Take: The dental and vision exclusions are the ones that surprise people most, especially since they’re such routine parts of healthcare for most adults. This is exactly why so many Medicare Advantage plans build dental, vision, and hearing benefits into their coverage — Original Medicare was simply never designed to include them, and that gap doesn’t go away on its own.

What Part B Costs in 2026

Part B has three separate cost components, and understanding all three matters:

Cost Component

2026 Amount

Standard monthly premium

$202.90

Annual deductible

$283

Coinsurance on most covered services

20%

The premium is deducted automatically from your Social Security check if you’re already collecting benefits. If you’re not yet collecting Social Security, you’ll receive a bill, typically every three months.

The deductible works differently than Part A’s — it’s a straightforward annual figure. You pay the first $283 of Medicare-approved outpatient costs each calendar year, and then Medicare’s cost-sharing kicks in.

The coinsurance is where the real risk lives. After your deductible is met, Medicare pays 80% of the Medicare-approved amount for most covered services, and you’re responsible for the remaining 20%. There is no yearly cap on this 20% under Original Medicare alone. If you have a $100,000 course of cancer treatment, your 20% share is $20,000 — unless you have a Medigap policy or Medicare Advantage plan absorbing that cost.

Paul’s Honest Take: I put this in bold because it’s genuinely the single most important number in this entire guide. That uncapped 20% is the whole reason Medigap and Medicare Advantage exist as products in the first place. Original Medicare by itself was never designed to protect you from a truly expensive year — it was designed to cover 80% of it and leave the rest to you.

IRMAA: What Higher Earners Actually Pay

If your income is above certain thresholds, you’ll pay more for Part B through the Income-Related Monthly Adjustment Amount (IRMAA) — based on your tax return from two years prior. For 2026, that means your 2024 income determines your premium tier.

2024 Income (Individual)

2024 Income (Married, Joint)

Total Part B / Month

$109,000 or less

$218,000 or less

$202.90

$109,001 – $137,000

$218,001 – $274,000

$284.10

$137,001 – $171,000

$274,001 – $342,000

$405.80

$171,001 – $205,000

$342,001 – $410,000

$527.50

$205,001 – $499,999

$410,001 – $749,999

$649.20

$500,000 and above

$750,000 and above

$689.90

At the top tier, you’re paying more than three times the standard premium. If your income has recently dropped — retirement, the loss of a spouse, or certain other life-changing events — you can appeal your IRMAA determination using Form SSA-44.

Do You Have to Enroll? And What Happens If You Don’t?

Technically, Part B is optional — Medicare won’t force you into it. But opting out without a valid alternative is genuinely risky, because of how the penalty structure works.

If you don’t sign up during your Initial Enrollment Period (the 7-month window around your 65th birthday) and you don’t have qualifying employer coverage, you’ll face a permanent 10% penalty added to your premium for every full 12-month period you went without Part B. That penalty doesn’t expire — you pay it for as long as you have Part B, which for most people means for the rest of your life.

Example: If you delayed enrollment by 24 full months without a valid exception, you’d pay an extra 20% on top of the standard $202.90 premium in 2026 — roughly $40.58 more, every month, permanently.

How Part B Works with Group Insurance

Just like Part A, whether you can safely delay Part B without penalty comes down to one specific number: how many employees your company has.

Companies with 20 or more employees: If you or your spouse are actively working and covered by a genuine group health plan, your workplace insurance is primary, and you can legally delay Part B without any penalty. When that employment or coverage eventually ends, you get an 8-month Special Enrollment Period to enroll in Part B penalty-free.

Companies with fewer than 20 employees: Medicare automatically becomes your primary insurer at 65, regardless of your employment status. You need to enroll in Part B right on schedule. If you don’t, your small employer’s plan can legally refuse to pay claims that Medicare should have covered first — potentially leaving you responsible for the full cost.

Paul’s Honest Take: I say this in nearly every guide I write, because it’s genuinely one of the costliest misunderstandings I encounter: “I have good coverage at work” and “I’m protected from Medicare’s enrollment deadlines” are two completely different statements, and whether the second one is true depends entirely on your employer’s size — not how generous the coverage feels. Confirm the actual employee count before you decide to delay anything.

Retiree Coverage Is Not the Same as Active Employer Coverage

This is a distinction that catches a genuinely large number of people off guard: the “20 or more employees” exception only applies to active employment. If you retire and your former employer offers you retiree health benefits — sometimes a genuinely good, comprehensive plan — that coverage does not create a Special Enrollment Period the way active group coverage does, and it does not exempt you from enrolling in Part B on time.

Paul’s Honest Take: I’ve seen this mistake more than once, and it’s an especially painful one because it happens to people who did everything right during their working years. Someone retires with a strong retiree health plan from a large employer, assumes it works the same way their active coverage did, and delays Part B — only to find out later that retiree coverage was never a valid reason to delay in the first place. The moment you stop actively working, that clock starts, regardless of how good your retiree plan looks on paper. If you’re retiring and keeping employer retiree benefits, treat enrolling in Part B as something to handle right on schedule, not something retiree coverage lets you postpone.

Why You Need Both Part A and Part B for Medigap or Medicare Advantage

Here’s a foundational requirement worth understanding clearly, since it shapes every other coverage decision in Medicare: you must be enrolled in both Part A and Part B before you can buy a Medigap policy or enroll in a Medicare Advantage plan. Neither product exists as a standalone substitute for Original Medicare — both are built specifically to work alongside it.

  • Medigap fills the cost-sharing gaps left by Original Medicare (Parts A and B) — it has nothing to fill in if you’re not enrolled in both parts to begin with.
  • Medicare Advantage legally must provide at least the same coverage as Parts A and B combined, which is only possible because you’re required to be enrolled in both before a Medicare Advantage carrier can enroll you.

Paul’s Honest Take: This surprises people who assume they can somehow “skip” Part B and go straight into a Medicare Advantage plan to avoid the extra premium. It doesn’t work that way — Part B enrollment, and its premium, is a prerequisite either way, whether you end up on Original Medicare with Medigap or on a Medicare Advantage plan. There’s no path through Medicare that avoids the Part B premium once you’re actually using the system.

Does Medicare Work If You’re a Veteran?

Yes — and if you have VA health benefits, understanding how the two systems relate is genuinely important, because they work differently than most people assume.

Medicare and VA benefits do not coordinate. These are two entirely separate systems that each pay only for care received within their own network. Medicare doesn’t pay for care you receive at a VA facility, and VA benefits don’t pay for care you receive from a non-VA doctor or hospital. You, the veteran, choose which system to use each time you seek care.

Here’s the critical point: having VA benefits does not exempt you from Medicare’s enrollment deadlines. VA coverage is not considered a qualifying reason to delay Part B without penalty. If you don’t enroll in Part B during your Initial Enrollment Period and you’re relying solely on VA benefits, you can still trigger the permanent late enrollment penalty.

Why the VA itself recommends enrolling in Medicare anyway:

  • It gives you access to civilian doctors and hospitals outside the VA system
  • VA healthcare funding depends on annual Congressional appropriations, which isn’t guaranteed to remain stable
  • If VA authorizes only part of your needed care at a non-VA facility, Medicare can help cover the rest
  • Having both gives you meaningfully more flexibility and security than relying on either system alone

Paul’s Honest Take: This is one of the most common misconceptions I run into with veterans specifically, and it’s an expensive one to get wrong. Good VA coverage feels like it should be enough, and it might genuinely handle most of your care — but it doesn’t protect you from the Part B enrollment clock the way employer coverage from a large company can. The VA itself actively encourages enrolling in Medicare Parts A and B for exactly this reason. If you have VA benefits and are approaching 65, this is worth a direct conversation before you assume you’re covered.

Veterans who enroll in Part B can also purchase a Medigap policy, which can be particularly valuable if you use non-VA providers regularly — though if you primarily rely on VA facilities for most of your care, the value of an added Medigap policy may be more limited, and worth weighing carefully.

How Long Does It Actually Take to Get Part B Approved?

This is one of the most practical, and most overlooked, pieces of planning — especially if you’re leaving a job after 65 and coordinating your Part B start date around the end of your employer coverage. Applying isn’t instant, and the timeline depends heavily on which enrollment window you’re using.

Enrollment Situation

Typical Processing Time

When Coverage Actually Starts

Initial Enrollment Period (around 65)

2–4 weeks, sometimes up to 6

1st of your birthday month (if applied in the 3 months before) or 1st of the month after you apply (if applied during or after your birthday month)

Special Enrollment Period (leaving employer coverage)

4–8 weeks, sometimes longer

1st of the month after your application is submitted

General Enrollment Period (Jan 1–Mar 31, missed window)

4–6 weeks

1st of the month after you apply

Why the Special Enrollment Period takes longer: applying after leaving employer coverage requires two forms, not one — Form CMS-40B (the actual Part B application) and Form CMS-L564 (Request for Employment Information), which your employer needs to complete to verify you had qualifying coverage. Social Security has to manually review both, which is exactly why this route consistently takes longer than a standard Initial Enrollment Period application.

Paul’s Honest Take: This timeline question comes up constantly with clients who are retiring or leaving a job after 65, and it deserves real attention — not just because of the penalty risk we’ve already covered, but because a slow approval can leave you with an actual gap in coverage if you time it too tightly. My standard advice: start this process at least 2 to 3 months before you need Part B to actually begin, not the week your employer coverage ends. If your former employer is slow to complete their portion of Form CMS-L564, that alone can hold up the entire application — so it’s worth following up with your HR or benefits department directly rather than assuming it’s been submitted.

Practical tips to avoid delays

  • Apply online through SSA.gov whenever possible. It’s consistently the fastest method — mailed or faxed forms are more prone to getting lost or delayed.
  • If you’re on a Special Enrollment Period, submit Form CMS-L564 alongside Form CMS-40B, not separately. They need to arrive together, and one incomplete form can stall the whole application.
  • Expect a short intake lag even with online applications. It can take several business days for an online submission to actually appear on a local Social Security agent’s screen — don’t panic if you call shortly after applying and they say they don’t see it yet.
  • Once approved, you don’t have to wait for your physical card. Your Medicare Beneficiary Identifier typically appears in your online Social Security or Medicare.gov account within a day or two of approval, and you can print a temporary card from there — the physical card generally arrives by mail within about 30 days.

Excess Charges: The Cost Almost Nobody Knows to Ask About

Here’s a detail that surprises even people who’ve been on Medicare for years: not every doctor who accepts Medicare agrees to accept Medicare’s approved amount as full payment.

Providers fall into three categories:

  • Participating providers accept Medicare assignment, meaning they agree to accept the Medicare-approved amount as payment in full. This covers the vast majority of providers — roughly 98% of doctors nationally.
  • Non-participating providers still accept Medicare patients but haven’t agreed to accept the standard rate. They can charge an excess charge of up to 15% above the Medicare-approved amount.
  • Opted-out providers have left the Medicare system entirely and can charge whatever they want under a private contract — Medicare pays nothing at all for care from these providers, except in emergencies.

How excess charges actually work: if the Medicare-approved amount for a service is $300 and you see a non-participating provider, they can legally charge up to an additional $45 (15%) on top, for a total bill of $345 — and that excess amount doesn’t count toward your Part B deductible.

Eight states currently prohibit or limit excess charges entirely: Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island, and Vermont. If you live in one of these states, you’re generally shielded from excess charges from providers within your state — though you could still face them if you receive care from a non-participating provider elsewhere.

Paul’s Honest Take: This is exactly why Medigap Plan G matters so much for people who want maximum flexibility. Plan G covers excess charges in full — Plan N does not. If you’re the kind of person who wants the freedom to see any doctor without worrying about billing surprises, that distinction is worth understanding clearly before you pick between the two. And regardless of which plan you choose, it’s always worth asking a new provider directly whether they accept Medicare assignment before your first appointment.

The HSA Rule: Part B Closes the Door Too

If you’re hoping to keep contributing to a Health Savings Account, know this clearly: enrolling in Part B — or any part of Medicare — ends your ability to make new HSA contributions. This isn’t unique to Part B; it applies the moment you enroll in Medicare in any form, including premium-free Part A.

If keeping your HSA active matters to you, the only way to legally delay both Part A and Part B is through qualifying employer coverage — which, as covered above, generally requires an employer with 20 or more employees. And because Part A enrollment can be backdated up to 6 months once you do enroll, it’s smart to stop HSA contributions 6 months before you plan to sign up for Medicare or file for Social Security, whichever comes first.

Frequently Asked Questions

Is there a cap on what I’ll pay for Part B services in a year? Not under Original Medicare alone — the 20% coinsurance has no yearly limit. A Medigap policy or Medicare Advantage plan is what actually caps your exposure.

What happens if I don’t sign up for Part B on time? You’ll generally face a permanent 10% penalty on your premium for every 12-month period you went without coverage, unless you qualify for a Special Enrollment Period through active employer coverage.

Do I need Part B if I have good coverage through a small employer? Almost certainly yes. If your employer has fewer than 20 employees, Medicare becomes your primary insurer at 65 regardless of your job coverage, and not enrolling can leave you exposed to unpaid claims and a lifelong penalty.

Do veterans need Medicare Part B if they have VA benefits? Generally, yes. Medicare and VA benefits don’t coordinate — each only pays for care within its own system — and VA coverage doesn’t exempt you from Medicare’s enrollment deadlines or penalties.

What is a Part B excess charge? An additional charge, up to 15% above the Medicare-approved amount, that a non-participating provider can legally bill you. It doesn’t count toward your deductible, and only Medigap Plan G (among current plans) covers it in full.

Can I keep contributing to my HSA if I enroll in Part B? No. Enrolling in any part of Medicare, including Part B, ends your HSA contribution eligibility going forward.

How long does it take to get approved for Part B? It depends on the enrollment window. Initial Enrollment Period applications typically process in 2–4 weeks. Special Enrollment Period applications, used when leaving employer coverage, generally take 4–8 weeks since Social Security must manually verify your prior coverage using Form CMS-L564. Start the process at least 2–3 months before you need coverage to begin, especially when coordinating around a job ending.

The Bottom Line

Part B is the half of Medicare that covers your everyday medical care — and it’s also where the real financial exposure of Original Medicare lives, thanks to that uncapped 20% coinsurance. Whether you should enroll at 65, whether you can safely delay, and how much of that exposure you’re carrying all depend on details specific to your situation: your employer’s size, your income, your VA status, and which doctors you actually see.

If you want help sorting out exactly how Part B applies to your specific circumstances — or want to understand how Medigap or Medicare Advantage could close that uncapped coinsurance gap — that’s exactly the conversation I have with clients every day, at no cost to you.

Call 631-358-5793 or visit paulbinsurance.com to set up a time to talk it through.

Paul Barrett, CMIP, is the founder of The Modern Medicare Agency, based in Melville, NY, and has spent 18+ years exclusively helping people navigate Medicare — never life insurance, never annuities, just Medicare. He’s licensed in 37 states, represents more than 40 carriers, and has personally helped over 5,000 clients choose coverage that actually fits their lives.

Figures current as of 2026 and sourced from CMS, Medicare.gov, and the Social Security Administration. Individual circumstances vary, especially around employer coverage, VA benefits, and income-based premiums — always verify your specific situation before making enrollment decisions.

Sources

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