How does the Part B penalty work?
When you first become eligible, you have a seven-month Initial Enrollment Period around your 65th birthday month. If you don't sign up for Part B then, and you don't have group health coverage from your own or your spouse's current job, Medicare counts the months until you do sign up. Each full 12 months adds 10% of the standard premium. A 30-month gap is two full periods, so 20%. In 2026 that is 20% of $202.90, about $40.58 a month on top of your premium.
The penalty follows the standard premium, so it rises when the premium does, and you generally pay it for as long as you have Part B. Coverage that doesn't protect you from the Part B penalty includes retiree coverage, COBRA, Marketplace plans and VA health care.
State Health Plan retirees: the Plan says Medicare Parts A and B must be in effect to enroll in its Base Plan or Enhanced Plan. A retiree whose Part B isn't in place is defaulted to the 70/30 Plan, which processes claims as if Part B had paid, so you pay the share Part B would have covered. A gap in Part B can cost you both your choice of Plan options and a lifelong penalty. See State Health Plan retirees and Medicare.
If you're still working for the state, a school system, a city or a county at 65 and have group coverage through that job, you can usually wait without a penalty. For state employees still working, the State Health Plan pays first and suggests enrolling in Part A while delaying Part B; see working past 65. Military retirees should know that TRICARE For Life requires Part A and Part B; see military, veterans and TRICARE in North Carolina.
How does the Part D penalty work?
The Part D penalty applies if, after your Initial Enrollment Period, you go 63 days or more in a row without a Medicare drug plan or other creditable drug coverage. Creditable coverage is drug coverage expected to pay at least as much as standard Part D; your employer, union or other plan sends a notice each year saying whether yours is. Keep those notices: they are your proof if Medicare later asks. VA drug coverage counts as creditable, and so does care from the Indian Health Service, a tribe or an urban Indian organization, which matters for members of the Eastern Band of Cherokee Indians who use the Cherokee Indian Hospital.
The penalty is 1% of the national base beneficiary premium for each full month without coverage. In 2026 the base premium is $38.99, so a 24-month gap adds 24% of it to your monthly drug plan premium: $9.36 before Medicare rounds it to the nearest 10 cents. The base premium changes every year, so the penalty does too. More on drug plans is on Medicare Part D in North Carolina.
The State Health Plan's Base Plan and Enhanced Plan include group Part D drug coverage. If you leave a job or a group plan, check that your next coverage includes drugs, or add a Part D plan within 63 days, unless you have other creditable drug coverage.
How can North Carolinians get the penalties removed?
Medicare says that if you enroll in a Medicare Savings Program you won't pay a Part B late penalty, and if you qualify for Extra Help you don't pay a Part D late penalty.
- MQB (North Carolina's Medicare Savings Programs). NC Medicaid pays your Part B premium through MQB-Q (the federal QMB, which also covers Medicare deductibles and coinsurance), MQB-B (SLMB) or MQB-E (QI). The income limits are set at about 100%, 120% and 135% of the federal poverty level, and countable resources in 2026 must be no more than $9,950 for one person or $14,910 for a couple. Apply online through ePASS or at your county Department of Social Services, and check your numbers with the savings programs screener. Read Medicare Savings Programs in North Carolina.
- Extra Help. If you are in an MQB program, have full NC Medicaid or get Supplemental Security Income, you get Extra Help automatically. Otherwise you can apply with Social Security. Its resource limit is higher than the MQB limit. See Extra Help in North Carolina.
- Special Enrollment Periods. If you had group coverage from current work, you generally have eight months after that job or coverage ends to sign up for Part B without a penalty. See enrollment periods for this and other situations.
Sources
- Medicare.gov — Avoid late enrollment penalties
- Medicare.gov — Part D costs and the late enrollment penalty
- Medicare.gov — Creditable prescription drug coverage
- eCFR — 42 CFR 423.286, Rules regarding premiums (late enrollment penalty)
- eCFR — 42 CFR 423.56, Procedures to determine and document creditable status (Indian health coverage)
- CMS — 2026 Medicare Parts A & B premiums and deductibles
- NCDHHS — MA-2252, Non-MAGI Medicaid income and reserve limits, effective April 1, 2026 (PDF)
- NC Medicaid — How to apply
- State Health Plan — 2026 pre-65 retiree presentation (Medicare Parts A and B) (PDF)
- TRICARE — TRICARE For Life
Frequently asked questions
How is the Part D late enrollment penalty calculated?
Medicare multiplies 1% of the national base beneficiary premium ($38.99 in 2026) by the number of full months you went without Part D or other creditable drug coverage, and rounds to the nearest 10 cents. It is added to your drug plan premium, and the amount changes each year with the base premium.
How much is the Part B late penalty in 2026?
10% of the standard Part B premium for each full 12-month period you could have had Part B but didn't, with no group coverage from current work. In 2026 each 10% is about $20.29 a month, and you generally pay it for as long as you have Part B.
Can NC Medicaid make my Part B penalty go away?
Yes. Medicare says you won't pay a Part B late penalty if you enroll in a Medicare Savings Program. In North Carolina those are MQB-Q, MQB-B and MQB-E, and your county Department of Social Services decides eligibility. North Carolina counts both income and resources, so check both with the savings programs screener.
Does State Health Plan retiree coverage protect me from the Part B penalty?
No. Retiree coverage isn't group coverage from current work, so it doesn't give you a Special Enrollment Period for Part B. The Plan also requires Parts A and B to be in effect for its Medicare Advantage options, and on the 70/30 Plan it pays as if Part B had paid, so sign up when you're first eligible.
What if I think my penalty is wrong?
For Part D, you can ask for a reconsideration; your plan's penalty letter explains how and gives a deadline. For Part B, contact Social Security, especially if you had group coverage from your own or your spouse's current work during the months counted.
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