This is not intended to be a trick question. But in the Fair Kathleen Sebelius' HHS, it appears to have a trick answer.
On page 25 (page 26 in the on-line version) the 2013 Medicare handbook "Medicare and You" states that "Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn't sign up for it."
That sounds pretty clear - what's the praahblem?
Well. Since you ask.
It seems there is a Social Security document called the “Program Operations Manual System.” This document is essentially the operating instructions and rules for Social Security.
As it happens, a little-known, double-secret codicil in this manual requires that anyone who declines Medicare benefits thereby forfeits their Social Security benefits.
In early 2012, a legal challenge arose - Hall v Sebelius - over this double-secret Social Security rule. The plaintiff argued that neither the Social Security Act nor the Medicare Act allows administrative agencies to precondition benefits under one program on acceptance of benefits from another.
The district court disagreed and the U.S. Court of Appeals for the D.C. Circuit affirmed the lower court decision. Both decisions were sharply divided. In January 2013, the Supreme Court declined to hear the case. By its decision, the Supreme Court let stand the lower courts' controversial ruling.
So the "trick answer" is yes, you face a 10% per year premium penalty for failing to enroll in Part B when eligible. But that is the least of your worries - your penalty is actually much greater. You have forfeited your Social Security benefits.
This much greater penalty for non-enrollment is NOT included on page 25 (or 26) of the Medicare and You handbook. It's still double-secret, you see.
Are we all clear now?
Left unanswered at this time - "how long does the SS Admin wait after you are eligible for Medicare but don't enroll, to take away your SS benefits?" One quarter? One month? One hour?