Medicare Penalties in California and How to Avoid Them

Medicare is U.S. government health insurance for people who are 65 or older and some younger people with disabilities. Although Medicare coverage can be confusing, learning about it helps you have health insurance and avoid paying more.

Signing up on time and understanding your initial enrollment period can help you avoid penalties. Delayed enrollment can lead to penalties.

Medicare Part A, Part B, and Part D all have penalties, but each one is different. For Parts B and D, the penalties can add to your costs for as long as you have Medicare. You can use our Medicare Late Enrollment Penalty Calculator for 2026 to figure out how much you might need to pay.

If you live in California, you may already be aware of health insurance penalties. California has a state law requiring you to have health insurance. If you don’t, you might owe money when you file your state taxes.

What Are Medicare Late Enrollment Penalties?

If you don’t sign up for Medicare on time, you may have to pay a late enrollment penalty. The amount owed depends on the type of Medicare you need, how long you waited to sign up, and how the penalty is calculated.

Visit Medicare.gov or talk to an insurance agent for help. It’s also a good idea to keep records of when you signed up and existing coverage to help avoid penalties.

Medicare Part A Penalties

Medicare Part A is also called hospital insurance. Most people get Medicare Part A for free. But some people have to pay for it. This happens if you didn’t work long enough to earn free Part A.

If you have to pay for Part A and don’t sign up when you’re first eligible, your monthly cost could increase by 10%. You’ll pay this extra amount for twice as long as you waited to sign up. After that, the penalty ends.

Medicare Part B Late Enrollment Penalty

Medicare Part B coverage includes doctor visits, outpatient care, and preventive services.. If you sign up late, you’ll pay a penalty.

The Part B penalty is 10% per full year you could have signed up for but didn’t. This extra cost is added to your monthly payment. You’ll usually pay this penalty in your higher premium for as long as you have Part B. You might also pay more based on your income.

If you or your spouse still works and has health insurance from a current employer, you may be able to wait to sign up. Talk to your employer to learn more and see if you could qualify for a Special Enrollment Period.

Part D Late Enrollment Penalty (Drug Coverage)

Medicare Part D gives you prescription drug coverage. If you sign up late, you’ll pay a penalty.

The penalty is 1% extra for each month you go without drug coverage. That adds up to 12% more per year. You’ll pay this penalty on top of your standard premium if you don’t join a drug plan when you first get Medicare, or if you go 63 days or more without good drug coverage.

When you join a drug plan, the plan will tell you if you owe a penalty and how much you’ll pay.

Some people can skip or delay Medicare Part D without a penalty if already having drug coverage that’s just as good as Medicare’s. Examples include VA health benefits or TRICARE for Life.

Medicare Advantage Plan Penalties

Medicare Advantage plans combine Medicare Part A and Part B. Some also include drug coverage. These plans don’t have their own late penalties. But you could still owe penalties for Part B or Part D if you signed up late for those.

You can switch plans during certain times of the year. Just watch out for penalties if you delayed signing up earlier.

How to Avoid Penalties

Here are ways to avoid paying costly extra penalties:

• Sign up on time when you’re first allowed to
• Qualify for a Special Enrollment Period (like if you have job-based insurance)
• Have other creditable coverage that is just as good as Medicare
• Enroll in a Medicare Savings Program (this can help with Part B costs)
• Qualify for Extra Help (this can help with Part D costs)
• Are enrolled in Medicaid services, which counts as credible coverage

What If You Think the Penalty Is Wrong?

You can ask Medicare to look at your penalty again. This is called a reconsideration.

For example, your drug plan can send you a form to fill out. You have 60 days from the date you received the Part D penalty letter to request this review. Send any proof that supports your case.

While you wait for a decision, you still have to pay the penalty. It’s part of your bill by law. If you don’t pay, your drug plan could drop you. But if Medicare decides the penalty was wrong, you’ll get your money back.

California Healthcare Penalty

Covered California is how state residents get medical insurance coverage while living in California. California requires residents to have insurance or pay a penalty, much like Medicare. However, Covered California penalties differ in a few important ways from Medicare late enrollment penalties.

The Franchise Tax Board (FTB) sets a health insurance penalty for consumers to pay when filing their state income tax return. The penalty amount is usually updated each fall for the following year.

To avoid a penalty, most residents must have qualifying health insurance for themselves, their spouse or domestic partner, and their tax dependents for every month of the year. If you or your dependents do not have coverage or an approved exemption for one or more months, you may pay a penalty for those months.

For 2025, the minimum annual penalty amounts are:

• Adults (18 and older): $900
• Children (under 18): $450

You can claim exemptions when you file your state income tax return, usually early in the following year. Many exemptions are available when filing (short coverage gap, low income, unaffordable coverage, etc.)

Coverage for even one day in a month counts as coverage for the whole month.

For more information, visit https://www.ftb.ca.gov.