How the Part B penalty works
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. For how employer coverage works with Medicare, see working past 65 and do I need Part B if I'm still working? Veterans and TRICARE users should read veterans and military coverage.
How the Part D penalty works
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.
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 Arizona.
Penalty relief through AHCCCS and Extra Help
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. In Arizona, the Medicare Savings Programs (QMB, SLMB and QI-1) are run by AHCCCS and have no asset test, so income is what decides.
- Medicare Savings Programs. AHCCCS pays your Part B premium, and with QMB also your Medicare deductibles and coinsurance. You don't have to have Part B already to apply for SLMB or QI-1. Check your income with the savings programs screener and read Medicare Savings Programs in Arizona.
- Extra Help. If you are in a Medicare Savings Program or have AHCCCS, you get Extra Help automatically. Otherwise you can apply with Social Security.
- Special Enrollment Periods. If you had job-based coverage, 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
- CMS — 2026 Medicare Parts A & B premiums and deductibles
- AHCCCS Eligibility Policy Manual — 409 Medicare Savings Program (MSP)
- AHCCCS — Qualified Medicare Beneficiary (QMB) Only
Frequently asked questions
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 job-based 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.
How is the Part D penalty figured?
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.
Can AHCCCS 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 Arizona those are QMB, SLMB and QI-1, run by AHCCCS, and they have no asset test.
Does Extra Help remove the Part D penalty?
Yes. If you get Extra Help, you don't pay a Part D late enrollment penalty.
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 job-based coverage from your own or your spouse's current work during the months counted.
