Q. How does the Part B late penalty work? I missed signing up during my initial enrollment period, which expired at the end of August 2008, but I enrolled in February 2009. I was told I must pay a 10 percent penalty on all my future Part B premiums. Is this correct?

A. No, in your case, it's not correct. The law says that a 10 percent penalty is imposed "for each full 12-month period" that people delay enrolling in Part B when eligible to do so (unless they have group health insurance from their own or their spouse's current employer). If the delay is less than 12 full months, the penalty should not apply.

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Social Security officials explain that the penalty clock starts ticking at the beginning of the month after your seven-month initial enrollment period (IEP) expires, and shuts off on the final day of the annual general enrollment period (GEP) in which you sign up for Part B.

So in your case, although you failed to enroll during your IEP, you did sign up the following February, during the GEP that runs from Jan. 1 to March 31. For you, the enrollment delay was officially seven months (Sept. 1 through March 31), so you won't incur a late penalty.

Here's a different example showing how the late penalty can hit. Say your IEP expires at the end of March and you sign up for Part B the following January during the GEP. That's an actual enrollment delay of only 10 months. But under Social Security rules, the clock continues to tick until the last day of the GEP in which you enroll. So the delay is considered to be a full 12 months (April 1 through March 31), and you must pay a 10 percent late penalty on all future Part B premiums.

Once you've missed your first deadline for joining Part B (according to the scenarios described below), you can enroll only during a general enrollment period, which runs from Jan. 1 to March 31 each year - with coverage not beginning until the following July 1. Missing each March 31 deadline means another full 12-month delay and a further 10 percent late penalty. For example, delaying enrollment by five years results in a 50 percent penalty — in other words, you'd permanently pay half as much again for the same coverage.

So it's important to know when your personal deadline for enrolling in Part B expires, and when the late penalty clock starts ticking, according to different circumstances:

• If you turn 65 and are not covered by group insurance provided by an employer for whom you or your spouse is still working: Your deadline comes at the end of your seven-month initial enrollment period (IEP), which expires at the end of the third month following the month in which you turn 65. For example, if your 65th birthday is in July, your IEP ends October 31.

• You can usually delay signing up for Part B beyond age 65 if:
  
  (a) You are covered by a group health insurance plan from your employer or union and you are still working, or
  
  (b) You are covered by your spouse's group insurance and your spouse is still working.
  
  If you lose this insurance or retire (or, if it's your spouse who has the employer plan, when he or she retires), you'll get an eight-month special enrollment period (SEP) to sign up for Part B without penalty at that time. But if you fail to enroll within this SEP, the Part B penalty clock is reset to the time when you retired or your group insurance ended, and not when your SEP expired. For example, let's say you retire in February, triggering an SEP that lasts through October, but you fail to sign up for Part B until the following open enrollment period in January through March. Since a full 12 months had elapsed (from the end of February to the end of open enrollment on March 31 of the following year, in this example), you would incur a 10 percent late penalty.
  

Next: Another way the late penalty can hit. »