Medicare is designed to help protect American’s wellbeing and financial security during their golden years by ensuring they have access to affordable medical care. If you’re 65 or older, you can count on Medicare coverage to take care of your health care expenses. However, many retirees don’t understand the basics of how Medicare coverage works.

Below are seven things every retiree should know to ensure you and your wallet emerge from this experience in excellent condition.

Medicare Has Several Distinct Parts

Medicare has four parts that work independently of one another.

  • Medicare Part A helps pay for nursing facilities, home health services, and hospital bills.
  • Medicare Part B covers services from physicians and other healthcare providers.
  • Medicare Part C, also called Medicare Advantage, has a separate health plan that provides ways to receive Part A and B services through an approved private health insurer.
  • Medicare Part D helps pay for prescription drugs.

You Can Sign Up Anytime, But Eligibility Begins at 65

Medicare coverage doesn’t kick in until age 65, but it pays to sign up early. Your first enrollment period begins three months before your 65th birthday. Any citizen or permanent resident of the U.S. 65 or over is eligible for all Medicare parts.

Medicare is Not Free

Medicare coverage can be inexpensive for some people, but it isn’t free. Medicare Part A doesn’t charge a premium, but the remaining parts come at a cost. The Part B monthly premium is $134 per month for most people in 2018, but that figure is income dependent. Premiums and fees for Medicare Parts C and D are a bit more complicated and vary widely.

Enrolling Late Will Cost You

If you don’t sign up on time, you could end up spending more for Medicare for life. Your first enrollment period starts three months before you turn 65 and ends three months after you turn 65. Some of your premiums may increase by 10% for each year you were eligible for Medicare coverage but didn’t enroll.

Medicare Won’t Cover Everything

Medicare won’t cover a host of services, including private-duty nursing, a private room, routine foot care, cosmetic procedures, hearing aids, TV and phone in hospital rooms, and personal care items.

Also note that for most expenses Medicare does cover, there are limits and amounts you will be responsible for paying. This is why it is so important to have a Medicare supplement plan or a Medicare Advantage plan.

Medigap and Medicare Advantage Plans Can Limit Your Maximum Exposure

If you carry original Medicare, you’ll want to also have a Medicare Supplement (also known as a Medigap policy) to help cover the 20% on average that Medicare will not cover.

Your other option is to sign up for a Medicare Advantage plan. These plans have a cap of no more than $6,700. After you’ve paid that much out of pocket, your Medicare Advantage plan will pay 100%.

When Can You Enroll?

You can sign up for Medicare Advantage or a Medicare supplement plan when you first go on Medicare and for a short time period after your Medicare begins.

There is also an annual enrollment period for Medicare Advantage plans and Part D prescription drug plans. This enrollment period started October 15th and ends December 7th. During this open enrollment period, you can switch between different Medicare Advantage plans or you can switch from original Medicare to a Medicare Advantage plan.

You can sign up for or switch Medicare supplement plans any time of the year, though you may need to qualify medically.

Finally, there’s a particular period between January 1st to February 14th every year that permits enrollees in Medicare Advantage plans to switch back to original Medicare.

Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage.