Medicare late enrollment penalties can increase your monthly premium substantially for the rest of your life. The government can penalize you each month that you maintain your Medicare coverage.

It’s essential to understand your options and how these late enrollment penalties work to avoid costly premiums in retirement. There are certain times you can enroll in Medicare, and the first enrollment period is a seven-month window around your 65th birthday, and this window is three months before and after you turn 65. The good news is if you’re receiving Social Security benefits, you will be enrolled in Medicare when you turn 65 automatically. You may be subject to a 10% penalty for each 12-month period you delayed enrollment that you don’t enroll in Part B during the initial open enrollment period. You generally cannot remove it once you have a Part B penalty. And for most, this means the rest of their life.

There is good news, though – you may put off enrollment in Medicare Part B and avoid a penalty if you have “creditable coverage.”