Turning 65 in 2027? The Two Medicare Late Enrollment Penalties That Follow You for Life

At a glance: Your first Medicare window is 7 months — the 3 months before your 65th-birthday month, the month itself, and the 3 months after (Medicare.gov). Miss it without group coverage from a current job at an employer with 20 or more employees and two penalties start accruing: Part B adds 10% for every full 12-month period you could have had it but didn't, and Part D adds 1% for every month without creditable drug coverage — both charged for as long as you have the coverage. One escape hatch exists: an 8-month Special Enrollment Period when job coverage ends. COBRA and retiree coverage do not open it (Medicare.gov; Social Security Administration). Rules and 2026 figures checked October 25, 2026.

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Medicare's penalties are not a Washington abstraction. In March 2026, MedPAC — the commission that advises Congress on Medicare — estimated that roughly 3% of beneficiaries pay a Part B late enrollment penalty, averaging about $54 a month, and roughly 5% pay a Part D penalty, averaging about $15 a month, most of them for life; AARP and the Medicare Rights Center put the Part B headcount at nearly 800,000 people. The cause is not carelessness — it is silence: Social Security's full retirement age is now 67, Medicare still starts at 65, and nobody is reliably notified. This guide is the notification.

Your 7-month window: the Initial Enrollment Period

For almost everyone, Medicare starts with the Initial Enrollment Period (IEP): 7 months that begin 3 months before the month you turn 65, include your birthday month, and end 3 months after it. Meet Margaret (labelled hypothetical), who turns 65 on Monday, June 14, 2027:

Date	What happens
Monday, March 1, 2027	Her Initial Enrollment Period opens
March–May 2027	If she signs up in this stretch, Part A and Part B start June 1, 2027
Tuesday, June 1, 2027	Coverage start date if she signed up early (premium-free Part A starts this month either way)
Monday, June 14, 2027	Her 65th birthday
June–September 2027 sign-ups	Still penalty-free, but coverage starts the month after she signs up
Thursday, September 30, 2027	Her IEP closes — the last penalty-free day without job coverage

The start-date rule, in Medicare.gov's own table, is worth memorizing:

If you sign up	Part B coverage starts
Before the month you turn 65	The month you turn 65
The month you turn 65, or during the 3 months after	The next month

Coverage always starts on the first of a month. Two edges: if your birthday falls on the 1st of a month, premium-free Part A starts the month before you turn 65 — your timeline shifts a month earlier. Miss the IEP entirely and the fallback is the General Enrollment Period, January 1–March 31, coverage starting the month after you sign up — plus whatever penalty your delay earned. Sign up through Social Security: SSA.gov, 1-800-772-1213, or a local office.

First question: is a card coming in the mail, or is it on you?

Enrollment is automatic for exactly one group: people already receiving Social Security (or Railroad Retirement Board) benefits at least 4 months before turning 65. If that is you, Medicare.gov says you are enrolled in both Part A and Part B and "don't need to do anything to sign up" — a welcome package with your card is mailed 3 months before coverage starts. You can decline Part B (the package explains how), but declining without qualifying job coverage starts the penalty clock below — treat the return envelope as a financial decision, not a formality.

Everyone else must apply on their own, inside the IEP. That is now most people: MedPAC noted the share of 65-year-olds already receiving Social Security fell from 92% in 2002 to 60% in 2016, because the retirement age rose while Medicare's stayed at 65. If you delayed Social Security, no card is coming.

Part A at 65: free for most — and the HSA trap

Part A (hospital insurance) is premium-free if you or your spouse paid Medicare taxes for 40 quarters (10 years). With fewer quarters you can buy it: in 2026, $311 a month with 30–39 quarters, $565 a month with fewer than 30 (CMS). Sign up for premium-Part A late and its penalty adds 10%, paid for twice the number of years delayed — $565 becomes $621.50 — the only Medicare penalty that eventually ends.

Read the full 6-month rule in The HSA Trap.

The trap hides in the timing. Sign up for Part A after 65 and coverage "starts 6 months back from when you sign up" (Medicare.gov), never earlier than the month you turned 65; applying for Social Security after 65 triggers the same backdated Part A automatically. Now add a Health Savings Account. IRS Publication 969: "Beginning with the first month you are enrolled in Medicare, your contribution limit is zero. This rule applies to periods of retroactive Medicare coverage." Contributions made during those backdated months become excess contributions — pulled back into income, with a 6% excise tax for each year they sit uncorrected. Medicare.gov's instruction: you and your employer should stop HSA contributions at least 6 months before you apply for Medicare or Social Security after 65. Spending the balance later stays fine; adding to it is what ends.

Working past 65: the one safe way to delay Part B

Still working at 65 — or covered by a working spouse — with a group health plan from current employment? Then you may be able to delay Part B penalty-free. Everything turns on one number: 20 employees.

Your situation at 65	Who pays first	What to do about Part B
Employer (yours or your spouse's) has 20 or more employees	The group plan pays first; Medicare pays second	You may delay Part B while the coverage lasts — no penalty
Employer has fewer than 20 employees	Medicare pays first; the group plan pays second	Enroll in Part A and Part B during your IEP — otherwise the small plan can pay as if Medicare already had, leaving you the bill

When the job or the coverage ends — whichever happens first — your Special Enrollment Period (SEP) runs for 8 months; you can also enroll any time while still covered. Coverage generally starts the month after you sign up (sign up while still working, or in the first month after coverage ends, and you may ask to delay the start up to 3 months). Social Security will want proof the coverage was job-based: your employer completes Form CMS-L564, filed with Form CMS-40B. Part D runs on a parallel track: delay is safe only while your plan's drug coverage is creditable.

The COBRA trap: coverage that feels like a job plan but doesn't count

Here is the most expensive sentence in Medicare, from Medicare.gov's own table: "COBRA isn't considered group health plan coverage. Getting COBRA doesn't change when this Special Enrollment Period ends." Social Security's SEP page says the same of the other familiar fallback: "COBRA … and retiree health plans aren't considered coverage based on current employment. If you have that type of coverage, you will not be eligible for a SEP when it ends."

So the 8-month clock starts on your last day of work (or the day job coverage ends), not the day COBRA runs out — even though COBRA typically offers 18 months and the card looks identical. Once you are 65, Medicare also pays first and COBRA or retiree coverage pays second, so the look-alike coverage may pay little until Medicare is in place. MedPAC worked exactly this case: a retiree who skipped Part B on retiree coverage owes the Part B penalty, while owing no Part D penalty if the retiree drug coverage was creditable. Retiring at 65 and electing COBRA? Enroll in Part B inside the same 8 months anyway — COBRA can ride along as secondary coverage; the SEP won't wait for it.

The two penalties that follow you for life, priced

Part B. Your premium goes up 10% for each full 12-month period you could have had Part B but didn't sign up (Social Security's own notice language), paid for as long as you have Part B. The percentage is permanent; the dollars are not — it is refigured on each year's standard premium, so it grows as premiums grow. At the 2026 standard premium of $202.90 (CMS):

Full 12-month periods late	Penalty	Your monthly premium	Extra per year
1	10%	$223.19	$243.48
2	20%	$243.48	$486.96
3	30%	$263.77	$730.44
5	50%	$304.35	$1,217.40

Only full 12-month periods count — 11 months late costs nothing extra; 12 months costs 10% forever. If you also pay an income-related surcharge, note the order: the penalty is figured on the standard premium, IRMAA added on top — our IRMAA brackets guide prices every tier of that second charge.

Part D. Go 63 days or more without Part D or other creditable drug coverage after your IEP and the meter runs: 1% of the national base beneficiary premium for each full uncovered month, rounded to the nearest 10 cents, added for as long as you have Part D. The 2026 base is $38.99 (CMS): thirty uncovered months is 30% × $38.99 = $11.70 a month, $140.40 a year, for life — recalculated every January: CMS has set the 2027 base at $41.33, so the same record costs $12.40 a month in 2027 on its own.

Get the free one-page Turning 65 Timeline — your IEP, SEP and Medigap windows on a single printable page, with both penalty formulas where you can see them. Get the free timeline (PDF) → or have it sent to your inbox →.

Meet Frank: the $9,739 COBRA mistake

(Labelled hypothetical. Dates follow the rules above; the premium is the verified 2026 standard premium, held flat only to show the scale — the real cost is higher, because the 20% rides each year's premium.)

Frank turns 65 in June 2027, like Margaret — then makes the classic retirement move:

Date	What happened
Wednesday, June 30, 2027	Frank retires from a 240-employee manufacturer; his group coverage ends
July 1, 2027	COBRA begins (18 months of it). His 8-month SEP begins the same day — nobody tells him
Tuesday, February 29, 2028	His SEP expires, with 10 months of COBRA still to run
Sunday, December 31, 2028	COBRA ends. From here he has no coverage at all
January 2029 – February 2030	14 months uninsured, waiting for a General Enrollment Period
February 2030	He signs up in the GEP
Friday, March 1, 2030	Part B finally starts

Medicare counts his unprotected months: March 2028 through February 2030 is 24 months — two full 12-month periods — a 20% penalty for life. At 2026 rates that is $243.48 a month instead of $202.90: an extra $40.58 a month, $486.96 a year, $9,739.20 over 20 years — on top of 18 months of full-price COBRA premiums for coverage Medicare treated as secondary, and 14 months with no coverage at all. All of it avoidable with one form filed before February 29, 2028.

Part D at 65: join, or hold creditable coverage

You can join a drug plan during your IEP — a stand-alone Part D plan alongside Original Medicare, or a Medicare Advantage plan that includes drug coverage. The alternative is to delay because other coverage is creditable: expected to pay, on average, at least as much as Medicare's standard drug coverage (employer and union plans often are; VA and TRICARE drug coverage count as well). You do not have to guess which kind you hold: any plan offering drug coverage to Medicare-eligible people must tell you whether it is creditable — in a notice sent each year before Open Enrollment (typically arriving in September), when you first become eligible, when you join, and whenever the status changes. Keep every notice: it is your proof, years later, that your uncovered months were covered months.

Lose creditable coverage and you get a 2-month Special Enrollment Period to join a drug plan; use it, and never let a gap reach 63 days. Once enrolled, the decision turns annual — plans reprice every fall, which is why our Open Enrollment mistakes guide exists.

Which 65 are you? The five paths

1. Already receiving Social Security at 65. You are auto-enrolled in Part A and Part B; the card arrives about 3 months early. Keep Part B (almost everyone should), or decline it only with the 20-or-more job coverage of path 2 — and stop HSA contributions, because Part A has already started.

2. Working past 65, employer has 20 or more employees. You may delay Part B — and Part D, if the drug coverage is creditable — while the job coverage lasts. The day you retire, write down the SEP's end date (8 months after work or coverage ends, whichever is first), file Form CMS-L564, and stop HSA contributions at least 6 months before applying for Part A or Social Security.

3. Working past 65, employer has fewer than 20 employees. Enroll in Part A and Part B during your IEP. Medicare is your primary payer; the job plan is backup. Delay buys nothing but gaps and penalties.

4. Retiring at 65, or no job coverage. Enroll in Part A and Part B during your IEP, add Part D or a Medicare Advantage plan, and shop Medigap inside its window (next section). COBRA, if elected, is a supplement — never a Part B strategy.

5. On a Marketplace plan. Move to Medicare during your IEP. Medicare.gov lists losing Marketplace coverage among the situations that do not qualify for a Special Enrollment Period — the IEP is your window, and the penalties apply if you miss it.

One more window: your 6 Medigap months

Compare the two most common Medigap choices in Plan G vs Plan N.

On the Original Medicare path, a second clock starts with Part B: the 6-month Medigap Open Enrollment Period, which "starts the first day of the month you're 65 or older and signed up for Part B" (Medicare.gov). During it you can buy any Medigap policy sold in your state — the insurer cannot turn you down or charge more because of health problems. For Margaret, Part B starting June 1, 2027 makes her window June 1 – November 30, 2027. Delay Part B legitimately through a job and the window shifts to whenever Part B starts; after any Medigap window closes, insurers in most states may medically underwrite you. A few states add extra windows — your State Health Insurance Assistance Program (SHIP) can confirm yours free.

The turning-65 checklist

1. Write down your IEP dates — birthday month, minus 3, plus 3. (The free timeline below does the arithmetic with you.)

2. Decide: automatic or apply? On Social Security already → watch the mail. Not on it → the application is yours, at SSA.gov.

3. Ask your employer, in writing: 20 or more employees? Is the drug coverage creditable? Keep the answer and every creditable-coverage notice.

4. HSA? Stop contributions at least 6 months before you will apply for Medicare or Social Security after 65.

5. Sign up in the first 3 months for a birthday-month start — Medicare.gov's table rewards the early filer with no gap.

6. Choose your path — Original Medicare + Medigap (inside its 6 months) + Part D, or Medicare Advantage — while the windows are open.

7. If you delay: calendar the SEP deadline the week you retire and file Forms CMS-L564 + CMS-40B inside it. COBRA's end date is not your deadline; your last workday plus 8 months is.

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Keep the dates where you can see them: the free Turning 65 Timeline puts your IEP, SEP, Medigap window and both penalty formulas on one printable page — with the HSA and COBRA warnings in red. Get the free timeline (PDF) → or have it emailed to you →. Every worksheet this desk publishes lives on our Worksheets page.

Frequently asked questions

Do I have to sign up for Medicare at 65 if I'm still working?

Part A, yes for almost everyone — it is premium-free with 40 quarters of Medicare-taxed work (the exception: HSA contributors, who may delay Part A too and must mind the 6-month backdating). Part B depends on the 20-employee line: at an employer with 20 or more employees and group coverage from current employment, you may delay Part B until the coverage ends, then use the 8-month SEP. Below 20 employees, Medicare pays first — enroll in Part B during your IEP.

I'm already getting Social Security. Do I need to do anything?

No application — with benefits received at least 4 months before turning 65, you are automatically enrolled in Part A and Part B, the welcome package and card arriving about 3 months before coverage starts (Medicare.gov). Your real decision is the reverse one: decline Part B only with qualifying 20-or-more job coverage, because declining starts the penalty clock otherwise.

I retired at 65 and took COBRA. Have I missed my window?

Not yet — but your window is not COBRA's. Your 8-month Special Enrollment Period began when your employment or group coverage ended, and "getting COBRA doesn't change when this Special Enrollment Period ends" (Medicare.gov). Enroll in Part B before those 8 months run out, even if COBRA continues; afterwards you are in Frank's story — the January–March General Enrollment Period and a permanent penalty.

Does the Part B penalty ever go away?

No. Medicare charges it "for as long as you have Part B coverage," and the percentage never shrinks — though the dollars are refigured on each year's standard premium, so they usually grow. The one penalty with an end date is premium-Part A's: 10%, paid for twice the years you delayed. Charged a Part B penalty despite qualifying job coverage? That is a paperwork problem — Form CMS-L564 from your employer is the proof that fixes it.

I take no prescriptions. Can I skip Part D for now?

You can — but the meter runs anyway. After a 63-day gap, every full month without creditable drug coverage adds 1% of the national base premium ($38.99 in 2026) to any Part D premium you ever pay, for as long as you have Part D. Five uncovered years is 60% — about $23.40 a month at the 2026 base.

When does my Medigap window start if I delay Part B for work?

With Part B. The 6-month Medigap Open Enrollment Period starts the first month you are 65 or older and enrolled in Part B, whenever that is — delay Part B to 68 under a big employer's plan and your guaranteed-issue window runs from your Part B start at 68. Outside the window (and outside a few state rules and guaranteed-issue situations), insurers may medically underwrite.

Sources & official figures

• Medicare.gov — When does Medicare coverage start? (opened October 25, 2026): the IEP start-date table (sign up before the birthday month → coverage the month you turn 65; the birthday month or the 3 months after → the next month); premium-free Part A starting the month you turn 65 (the month before, if your birthday is on the 1st); Part A signed up late starting "6 months back"; the General Enrollment Period (January 1–March 31, coverage the month after you sign up); the job-coverage SEP ending 8 months after coverage or employment ends, whichever first; "COBRA isn't considered group health plan coverage. Getting COBRA doesn't change when this Special Enrollment Period ends"; losing Marketplace coverage among the situations that do not qualify for an SEP: https://www.medicare.gov/basics/get-started-with-medicare/sign-up/when-does-medicare-coverage-start
• Social Security Administration — Special Enrollment Period (SEP) (opened October 25, 2026): the 8-month SEP beginning the month after group coverage or current employment ends, whichever first; "COBRA … and retiree health plans aren't considered coverage based on current employment. If you have that type of coverage, you will not be eligible for a SEP when it ends": https://www.ssa.gov/help/iClaim_medSEP.html ; POMS NL 00720.180: the premium "may go up 10 percent for each full 12-month period that you could have had Part B coverage, but did not sign up for it": https://secure.ssa.gov/POMS.nsf/lnx/0900720180
• Medicare.gov — I'm getting Social Security benefits before 65 (opened October 25, 2026): benefits received at least 4 months before turning 65 → "We'll automatically enroll you in both Medicare Part A … and Part B"; the welcome package and card mailed 3 months before coverage starts: https://www.medicare.gov/basics/get-started-with-medicare/before-65 ; When can I buy a Medigap policy?: the OEP is "the 6-month period that starts the first day of the month you're 65 or older and signed up for Part B": https://www.medicare.gov/health-drug-plans/medigap/ready-to-buy/when
• Internal Revenue Service — Publication 969 (2025), Health Savings Accounts (opened October 25, 2026): "Beginning with the first month you are enrolled in Medicare, your contribution limit is zero. This rule applies to periods of retroactive Medicare coverage… any contributions to your HSA made during the period of retroactive coverage are considered excess": https://www.irs.gov/publications/p969
• Centers for Medicare & Medicaid Services — 2026 Medicare Parts A & B Premiums and Deductibles fact sheet (November 14, 2025; opened October 25, 2026): standard Part B premium $202.90 a month; Part A buy-in premiums $311 (30–39 quarters) and $565 (fewer than 30 quarters); 2026 Part D national base beneficiary premium $38.99 (CMS 2026 Part D bid information); 2027 base beneficiary premium $41.33 (CMS, Medicare Part D 2027 National Average Monthly Bid Amount Information, July 2026): https://www.cms.gov/newsroom/fact-sheets/medicare-part-d-2027-national-average-monthly-bid-amount-information
• Medicare Payment Advisory Commission (MedPAC) — Medicare choice environment, March 2026 meeting presentation (opened October 25, 2026): estimated 2026 penalties (Part B lifelong, ~3% of beneficiaries paying, ~$54 average monthly penalty; Part D ~5%, ~$15; premium-Part A ~0.05%, ~$45); the share of 65-year-olds receiving Social Security at least 4 months before 65 (92% in 2002, 60% in 2016); a worked retiree-coverage case (Part B penalty applies; Part D penalty does not where the drug coverage is creditable): https://www.medpac.gov/wp-content/uploads/2026/03/Tab-G-Medicare-choice-environment-Mar-26.pdf

Last updated: October 25, 2026 — checked against Medicare.gov, Social Security and CMS sources on October 25, 2026.

Disclaimer: The Retirement Desk publishes education, not financial, tax, or legal advice. Margaret and Frank are labelled hypotheticals; their dates follow the enrollment rules cited, and Frank's lifetime cost holds the 2026 standard premium flat to show scale — your own penalty, if any, is figured by Social Security on your record and each year's premium. Employer headcounts, creditable-coverage status and state Medigap rules vary — confirm yours with your benefits office, Social Security (1-800-772-1213), or your State Health Insurance Assistance Program before a deadline, not after.

Filed under: Medicare — The Retirement Desk, the situation-first retirement money desk for Americans 60–75.