https://faq.ssa.gov/en-us/Topic/article/KA-02995
The link just above takes you to a page on the Social Security Administration site that contains little more than a list of links to penalties for Medicare Parts A, B and D. All three of these links go to the same page – this one: https://www.medicare.gov/basics/costs/medicare-costs/avoid-penalties
Nowhere on either of these pages does the Social Security Administration explain why, when or by whom this penalty was instituted.
The Social Security Administration also does nothing to explain what they consider a health plan that is “similar in value to Medicare” except to say that it could be from an employer. Without enforceable guidelines, this criteria is wide open to abuse by the Social Security Administration.
Not even the Centers for Medicare and Medicaid Services provides information on why, when and by whom late enrollment penalties were suggested and implemented: https://www.cms.gov/medicare/enrollment-renewal/part-d-plans/creditable-coverage-and-late-enrollment-penalty
Of particular interest is the following page, which notes that late enrollment penalty appeals are handled by an independent review entity “under contract with Medicare.” I’m not convinced this is not a conflict of interest, and I would be interested in exploring the idea of having this contract held by an agency or department other than Medicare, the Social Security Administration, or the Centers for Medicare and Medicaid Services. https://www.cms.gov/medicare/appeals-grievances/prescription-drug/late-enrollment-penalty-appeals
The following page offers one reason for the late enrollment penalty; however, it is a very weak argument that completely ignores the damage the late enrollment penalty does to beneficiaries who depend on Medicare because they lack other resources. “As with any health insurer, Medicare relies on people who aren’t sick to support the system, so that the costs for those who are very sick can be balanced out. Charging late fees helps to reduce these costs overall and encourage people to enroll on time.” For one thing, Medicare adds unnecessarily to the cost of living for those who have existing covering. for another – well, please explain to me why deliberately making the lives of our seniors and disabled harder is an acceptable way to “reduce these costs.” https://www.healthline.com/health/medicare/medicare-late-enrollment-penalty#why-is-there-a-fee