Final answer:
Medicare has a 7-month Initial Enrollment Period around an individual's 65th birthday during which they can enroll without penalty. Enrollments after this timeframe or after going 63 consecutive days without credible coverage post-IEP can result in a penalty lasting as long as one has Medicare coverage. This applies to both Medicare Part B and Part D plans.
Step-by-step explanation:
The Medicare penalty referred to in this question is likely the late enrollment penalty associated with Medicare Part B and potentially Part D. For Medicare Part B, if you don't sign up when you're first eligible, you may have to pay a late enrollment penalty for as long as you have Medicare coverage. Typically, you're first eligible when you turn 65 or if you're under 65 and have a qualifying disability.
There is a 7-month Initial Enrollment Period (IEP) that starts three months before you turn 65, includes the month you turn 65, and ends three months after that month. If you don't enroll during this IEP and you don't qualify for a Special Enrollment Period (e.g., losing employer coverage), you can sign up during the General Enrollment Period between January 1 and March 31 each year, but you may incur a penalty.
For Medicare Part D, the rules are similar. You'll likely owe a penalty if you go 63 consecutive days or more without Part D or other credible prescription drug coverage after your IEP for Part D is over.