Medicare Penalties Would Change for 700,000 Seniors Under New Bill

Members of Congress reintroduced the Medicare Economic Security Solutions Act in Washington, D.C., proposing sweeping reforms to Medicare Part B late enrollment penalties.

The legislation would limit penalties to 15 percent of the monthly premium and restrict their duration while also removing penalties for individuals who delayed enrollment due to other coverage, such as COBRA, retiree plans, or Veterans Affairs (VA) benefits.

Why It Matters

More than 700,000 Medicare beneficiaries currently face permanent increases in their Part B premiums because of late enrollment, with average penalties reaching 30 percent.

As more Americans work beyond age 65 and delay claiming Social Security, confusion about Medicare enrollment deadlines has become increasingly costly. The bill aims to simplify enrollment, encourage continued employment among seniors, and shield vulnerable populations from financial hardship due to administrative mistakes or legitimate coverage choices.

The reforms could deliver significant relief to older Americans, many of whom live on fixed incomes and struggle to afford healthcare.

What To Know

The Medicare Economic Security Solutions Act would amend Title XVIII of the Social Security Act to cap the Medicare Part B late enrollment penalty at 15 percent of the monthly premium.

The penalty would apply only for a period twice as long as the duration an individual went without coverage after becoming eligible, replacing the current system that applies a 10 percent penalty for each full 12-month period of delay—often for life. The new rules would apply to premiums paid for months beginning after a 90-day waiting period post-enactment.

The Act would exclude from penalty calculations any months during which a person had employer-sponsored COBRA, retiree health coverage, or VA health coverage. Under the current law, only periods of active employment with employer coverage are exempt, leaving some retirees and veterans exposed to penalties even if continuously covered.

The bill would also broaden special enrollment periods for Medicare Part B, applying not only to those leaving active employment but to those whose COBRA or retiree coverage terminates.

This change would allow more Americans to enroll without penalty when transitioning from such plans, addressing gaps left by the current rules.

Medicare’s enrollment system has become more confusing as the population works longer and many delay Social Security benefits. Unlike those automatically enrolled in both Social Security and Medicare, individuals who work beyond 65 and have alternative insurance must actively enroll in Medicare Part B. Those who miss the window face harsh, lifetime penalties.

“The Late Enrollment penalties in Medicare are confusing and can be hefty. Parts A, B, and D each have their own penalty calculations and timeframes, with Part B being the costliest,” Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek.

“The current law is a 10 percent penalty for each 12-month period of non-enrollment, and that penalty continues to be assessed each you carry Part B—quite possibly the rest of your life.”

A previous version of the bill introduced in 2024 garnered bipartisan support, with 12 Democrats signing onto it and two Republicans. Representative Kim Young, a Republican from California, supported the bill in 2024 and is also a co-sponsor of the current legislation along with Representative Nikema Williams, a Democrat from Georgia.

This bill arrives alongside broader Congressional debates over Medicare reform, including proposals in the One Big Beautiful Bill Act that would reshape eligibility, hospital support, and funding mechanisms.

What People Are Saying

Representative Kim Young, a Republican from California, said in a statement: “Seniors shouldn’t be punished for working later in life. Unfortunately, Americans can face higher fees for delaying Medicare enrollment. The Medicare Economic Security Solutions Act will cap these unnecessary, burdensome fees hurting seniors already struggling on fixed income.”

Representative Nikema Williams, a Democrat from Georgia, said in a statement: “Seniors in Georgia’s Fighting Fifth and across the country are finding themselves hit with surprise fees simply because they didn’t know all the rules about signing up for Medicare. It doesn’t have to be this way. The Medicare Economic Security Solutions Act makes sure seniors who continued to work are not unnecessarily punished for missing confusing deadlines. This bill is about protecting our seniors and helping them get the care they’ve earned.”

Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: “Most late enrollees miss the deadline because of confusion around still-working exceptions and the Special Enrollment Period once employment and group health coverage ends. It is typically an honest mistake that results in egregious penalties. This bill is a step in the right direction for our senior citizens, and with bipartisan sponsorship it has a good chance to pass.”

Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “It would be welcome news to any recipients who find themselves in one of these situations and, with many concerned about potential cuts to Medicare and Medicaid, it would be a positive development to share.”

What Happens Next

The Medicare Economic Security Solutions Act awaits action in Congress, where it must pass committees and secure majorities in both chambers before becoming law.

“Fears of growing deficits could through cold water on the proposal, as while no one wants to pay penalties, those dollars are ones the federal government can’t afford to discard at this time,” Beene said.

If enacted, its provisions would take effect after a 90-day transition period, delivering prompt changes to Medicare penalty rules for eligible seniors.