When the 7.5% of medical payments is subtracted on line 3 of Schedule A they do not have enough itemized deductions to exceed the standard deduction.

Using the amount on Line 4 of Schedule A (which is after the 7.5% is applied).they do not meet the requirement that the amount of unreimbursed medical expenses be greater than 10% of AGI or even 7.5% of AGI.

Thus 10% penalty is charged.