Medicare Part A penalty:Typically, Part A is completely free to those who are eligible. But, if an employee isn't eligible for premium-free Part A, and doesn't sign up for it when they are first eligible, their monthly premium may increase. Medicare Part B penalty: If an employee doesn't sign up for Part B when they are first eligible, they will pay a late enrollment fee and will continue to pay this fee for as long as they continue with Part B. Note: If an employee remains on the active employer plan, then they will not incur Part B penalties by delaying enrollment.