Rising health care costs are a familiar problem for many Americans. Insurance premiums and out-of-pocket expenses are always rising. If you're retired, you may be wondering how you're going to afford all of these bills when your income remains the same. 

Recent studies show that the average senior spends over $5,400 per year on health care. Over the course of their retirement, this can add up to over $315,000. Fortunately, seniors can depend on Medicare for comprehensive health coverage with affordable premiums. 

This guide will give you an overview of Medicare and ways to make your benefits work for you.

Medicare is a federal health insurance system for older adults and individuals who have certain qualifying health conditions. This program is funded by the Federal Insurance Contributions Act, better known as FICA. While you were working, the government deducted 1.45% from your paychecks and your employer paid a matching percentage. These tax dollars go directly to supporting Medicare and other Social Security benefits.

Medicare includes several components. Original Medicare, also known as Part A and Part B, is administered by the federal government. Other programs, such as Medicare Advantage and Medigap Insurance Supplements, are offered by private insurance companies that meet certain minimum coverage requirements. 

Here's what you should know.

• Part A: This part of Original Medicare pays for hospital stays, in-home medical care, hospice and a limited number of days in a skilled nursing facility.
• Part B: This is your core medical coverage and is paid for with a separate premium. It covers routine and preventive care, including doctors' visits, lab tests, wellness screenings and medical equipment.
• Part C: Commonly called Medicare Advantage, Part C includes all the benefits offered by Original Medicare, plus extras like vision and dental.
• Part D: Most people who have Original Medicare purchase a Part D Plan to cover their prescription medications. If you don't purchase this coverage when you join, you may have to pay a penalty later.
• Medigap: Medicare Insurance Supplements can reduce or eliminate your out-of-pocket expenses if you have Original Medicare. There are 12 Medicare Supplements, including plans A, C, D, K, L, M and N.

Medicare is a federal benefit available to individuals who qualify based on their work history and age or medical need. Medicaid is an income-based, state-managed program that's open to families who cannot afford their medical bills. It's possible to qualify for both Medicare and Medicaid. If you have a low to moderate income, you may qualify for ExtraHelp or a Medicare Savings Program, which can reduce your Medicare premiums, deductibles, prescription copays and out-of-pocket costs.

If you've had regular health insurance through your employer or the federal Health Insurance Marketplace, Medicare will seem very similar. Plans have monthly premiums, deductibles and fixed copays. One key difference is that Medicare is subsidized by payroll taxes, so the premiums are typically much lower than private insurance. 

Depending on the plan that you select, you may encounter HMO, PPO or EPO networks. In most cases, you'll pay lower rates when you choose contracted providers. These requirements will be familiar to anyone who's had private health insurance.

If you've maintained full-time employment for at least 10 years or 40 quarters, you'll be eligible for Medicare Part A with no premium once you turn 65. You may also be eligible for Medicare if you're disabled or have certain medical conditions, such as end-stage renal disease or Lou Gehrig's. Part B is a voluntary program that has a separate monthly premium. You must meet the following requirements to join:

• Be aged 65 or older
• Reside in the United States
• Be a U.S. citizen or legal resident

Medicare offers a comprehensive suite of health care benefits whether you have Part A and Part B or an Advantage Plan. Although Medicare won't pay for assisted living or long-term care, it may pay for certain medical services, such as intermittent nursing and physical therapy, provided in these facilities. 

Here are some products and services it covers:

• Inpatient hospital care
• In-home medical care and physical therapy
• Up to 100 days of nursing home care per benefit period
• Ambulance transportation between facilities
• Preventive care and health screenings
• Medically necessary treatments and services
• Durable medical equipment

Medicare provides valuable coverage to 64 million older adults, but it has a few exclusions:

• Unless you have an Advantage Plan, Medicare won't cover vision, dental or hearing.
• Medicare does not pay for an annual physical exam, but it offers a health assessment.
• Massage therapy and voluntary procedures, such as cosmetic surgery, aren't covered.
• The program does not cover long-term care, assisted living,  in-home assistance or concierge medicine.

If you receive Social Security retirement or disability benefits, you'll automatically be enrolled in Medicare Part A when you turn 65. If you're under 65, have a qualifying medical condition or are over 65 but don't receive retirement benefits, you'll need to contact the Social Security Administration at (800) 772-1213 to apply. You can also visit your local SSA office or manage your benefits online at SSA.gov.