:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-1290347046-9df4679218824f6796aba91b68b0be33.jpg)
Key Takeaways
- Medicare charges monthly premiums for Part B (outpatient care) and Part D (prescriptions).
- Payments are usually drawn from Social Security, but you can have a bill mailed to you that you pay by check, card, or bank transfer.
- Part B bills cover three months at once, leading to big first-time charges—plus, possible income-based surcharges or late penalties.
- Penalties can last a lifetime, so enrolling on time is essential.
You qualify for Medicare after paying Medicare taxes your entire career. While those taxes cover most of your costs, Medicare still charges additional premiums to enrollees. These premiums can be surprisingly high when you first join, especially since extra penalties and surcharges may also apply. Here’s how to plan ahead and avoid Medicare sticker shock.
When Can You Enroll for Medicare?
Most people can first enroll for Medicare when they turn 65. There are exceptions, such as someone qualifying earlier due to a serious disability, but in general, age 65 is when most people are able to enroll.
If this applies to you, at age 65 you qualify for an Initial Enrollment Period that lasts seven months: three months before you turn 65, the month you turn 65, and the three months after that. During this time, you decide which parts of Medicare you want to join and pay the necessary costs:
- Medicare Part A (hospitals): Typically no monthly charge. Paid for by your taxes.
- Medicare Part B (outpatient care): You’ll owe a monthly premium, which is $185 in 2025.
- Medicare Part C (Medicare Advantage): An alternative to Original Medicare offered by insurance companies, often with additional benefits including dental, hearing, and vision coverage. You’ll owe a monthly premium, set by each insurer.
- Medicare Part D (prescription drugs): Comes with a monthly premium based on the plan selected. Often included in Medicare Advantage plans, but can also be purchased on its own.
New Medicare enrollees may be surprised that they need to pay premiums for the different programs, especially since the way Medicare bills you can be costly upfront. In addition, signing up late or having a high income can create additional charges.
Tip
Remember that Medicare enrollment begins three months before you turn 65, so if you have an upcoming 65th birthday, mark that date on your calendar so that you can avoid paying additional penalty fees for late enrollment.
The First Bill Shock: You’re Billed for Retroactive and Quarterly Charges
How you pay for Medicare premiums can lead to bill shock. You can have the Part B and Part D premiums taken directly out of your Social Security check. If so, you’re charged monthly, which is easier to budget for.
If you’re not yet receiving Social Security or you just don’t want your Medicare charges taken from your Social Security check, you can have Medicare send you the bill directly, which you can pay by check, credit/debit card, or online bill pay. If you pay directly, you pay by the quarter rather than by the month. Those quarterly charges can be quite costly. Medicare Part B charges $185 per month in 2025. So if you pay a quarter at once, that’s $555 total.
Additionally, mailing time for your paper bill will add to the time lapsed between when your Medicare coverage begins and the date you receive your premium bill. You may owe even more for prior months that weren’t paid as you set things up.
You’re Charged Late Enrollment Penalties
Different parts of Medicare charge additional penalties if you sign up late for coverage or go for a period without coverage. Some of the penalties can be quite steep.
| Medicare Part | Why you may be charged a penalty | Penalty Cost |
|---|---|---|
| Part A | If you aren’t eligible for free Part A premiums and you don’t enroll in a Part A plan upon initial Medicare coverage | A 10% increase to your premium that will last for twice the amount of time between your enrollment period and when you signed up for Medicare Part A. This penalty is only issued if you didn’t sign up for Part A during your enrollment timeframe and you were not granted a special enrollment period. |
| Part B | If you didn’t select a Part B plan to enroll in during initial enrollment for Medicare coverage | A lifetime penalty of 10% of your premium cost for each year – or 12 months – that you weren’t enrolled in Part B. A lifetime penalty means that you will pay the penalty for as long as you have Part B coverage. |
| Part C | Part C plans do not charge penalties, but if you fail to sign up during the annual enrollment period, you’ll need to wait until the following year to join a plan. | No penalty, but if you enroll in a Medicare Advantage plan that includes Part D, you may pay a penalty for late enrollment in Part D. |
| Part D | If you don’t select a Part D Medicare drug plan during initial enrollment in Medicare, or if you let 63 days or more lapse without Part D coverage | A penalty of 1% the amount of your Part D premium coverage per month, which accumulates to a 12% penalty per year. This penalty lasts for the entire duration of your Part D plan coverage. |
Warning
Part B and Part D penalties last for life and cannot be reversed. Due to the costly penalties, particularly those that last for the entire lifetime of Medicare coverage, it’s extremely important to know when your initial enrollment time occurs and to select every part of your desired coverage upfront upon the commencement of your Medicare plan.
You Earned Enough That You Have to Pay Extra for Medicare (IRMAA)
Another unexpected fee that may drive up your costs for Parts B and D of Medicare is the Income Related Monthly Adjustment Amounts (IRMAA). This is an extra surcharge for people with high incomes.
How IRMAA works is by a calculation of your income reported on your tax return two years before the current insurance year. For example, whether or not you pay the IRMAA surcharge in 2026 will be a direct result of your income reported on your tax return for 2024.
If the IRMAA fee is going to be applied to your premiums for Part B and Part D, you will receive a notification in the mail from the Social Security Administration. The tricky part is that this notice can arrive at any time and could catch you off guard with Medicare sticker shock.
Should you experience an employment, medical, or life event that directly impacts the amount of income you earn, the Social Security Administration allows appeals for lowering the IRMAA surcharge you owe. To request the lowering of your IRMAA amount, the best thing to do is contact the Social Security Administration to find out which forms and documents you need to submit.
How to Manage Medicare Sticker Shock
Being billed more upfront can feel like a psychological punch, so being prepared for all possible Medicare expenses is the best way to maintain realistic expectations. To prevent the panic that can come when the first Medicare bill arrives with a quarterly amount on it, here are some things you can do:
- Know your billing cycle before your first payment is due
- Budget ahead for the larger initial bill
- If you receive Social Security benefits, consider paying Part B premiums out of your Social Security check, so you’re billed monthly instead of quarterly
- Check your income level and understand if IRMAA applies by looking at the annual limits set by the Centers for Medicare & Medicaid Services
- Sign up on time to avoid penalties
- Call Medicare or the Social Security Administration (SSA) to ask about appeals, payment options, and/or adjustments to your amount due from IRMAA
Once you get your coverage set up and figure out the different premiums, things become more predictable. While Medicare does increase premiums annually for inflation, it’s still easier to stomach than the large, upfront bills that can surprise people when they first join the program. By planning ahead, enrolling on time to avoid penalties, and appealing unnecessary surcharges when possible, you can avoid Medicare sticker shock.
