The Hidden Medicare Rule That Could Cost You Thousands (And How to Avoid It)

What’s the Hidden Medicare Rule?

Here’s the rule: If you delay enrolling in Medicare Part B without having the right kind of “creditable coverage,” you’ll face a lifetime penalty—and potentially a gap in coverage.

This is known as the Part B late enrollment penalty, and it’s one of the most misunderstood parts of Medicare.

Many people assume their current insurance is enough to delay Medicare. But when they finally do enroll, they’re shocked to learn:

• Their prior coverage didn’t qualify as “creditable”
• They now owe a monthly penalty for life
• They’ll have to wait months to get Medicare coverage

Who Is at Risk?

This rule most commonly affects people who:

• Are still working past age 65
• Are covered under COBRA or other retiree insurance
• Are using an ACA (Marketplace) plan or health-sharing ministry
• Are relying on a spouse’s employer plan that doesn’t meet Medicare’s standards

The Key Rule:

Only active employment coverage from an employer with 20+ employees counts as creditable coverage for delaying Part B. Almost every other type of insurance does not qualify.

This is where most people get burned.

How the Part B Late Enrollment Penalty Works

The penalty is 10% of your Part B premium for every 12-month period you delayed enrollment without creditable coverage.

And it’s not a one-time fee—it’s added to your monthly premium for life.

Example:

• You delay Part B for 3 years without creditable coverage
• That’s a 30% penalty
• In 2025, the standard Part B premium is $185.00/month
• A 30% penalty adds $55.50/month
• That’s $666 extra per year—forever
• Over 10 years? Nearly $7,000 in avoidable costs

Gaps in Coverage Are Even Worse

If you miss your Initial Enrollment Period (IEP) and don’t qualify for a Special Enrollment Period (SEP), you can’t just sign up for Medicare anytime.

You’ll have to wait for the General Enrollment Period (January 1 – March 31), and your coverage won’t start until July 1. That means months without Medicare coverage.

We’ve seen retirees go without insurance for cancer treatments, hospital stays, and prescriptions because they misunderstood this rule.

How to Protect Yourself

Here’s how to avoid this costly Medicare mistake:

Enroll in Medicare during your Initial Enrollment Period
This is a 7-month window:

• Starts 3 months before your 65th birthday month
• Includes your birthday month
• Ends 3 months after

If you plan to delay Part B, confirm your other coverage is creditable

• Only employer plans with 20+ employees count
• Get confirmation in writing from your HR department

Don’t rely on COBRA, retiree plans, or ACA plans
These do NOT qualify as creditable coverage.

When in doubt, ask for help
A quick call to a Medicare expert can save you thousands in penalties and give you peace of mind.

Recap: Don’t Get Caught by the Part B Late Enrollment Trap

Here’s what you need to remember:

• Delaying Medicare Part B without creditable coverage means lifetime penalties and possible gaps in coverage
• Only active employer coverage from a company with 20+ employees lets you delay Part B penalty-free
• Review your situation carefully, especially if you’re still working or on a spouse’s plan

Get Help Navigating Medicare—Free

At Bluewave Insurance, we help people avoid Medicare traps like this every single day. If you’re unsure whether you should enroll in Part B—or if your current coverage counts as creditable—we can guide you step by step.

Call us today at 800-208-4974 to book a free consultation.

We’ll help you:

• Confirm your coverage
• Avoid penalties
• Set up Medicare the right way, the first time