Medicare is part of the backbone of the financial support system for older Americans. With Social Security providing supplemental income to help with all expenses, Medicare helps retirees manage their healthcare, covering a large portion of the cost and helping to coordinate care, billing, and obtaining the services they need.

Every year, Medicare has an open enrollment period that runs from Oct. 15 to Dec. 7. During this period, Medicare participants can make changes to their coverage, and one common aspect of healthcare that can change dramatically from year to year is the need for prescription drugs. Medicare offers many options for participants to get drug coverage, and the best choice can save you hundreds or even thousands of dollars a year compared to less attractive alternatives. Here we'll share some tips on things to keep in mind as you make your decision in the coming weeks.

1. Know that you have two options for drug coverage

Medicare participants can get coverage for prescription drugs in one of two ways. Medicare Part D plans cover only drug costs, and you can find a wide variety of different Part D plans with various levels of coverage. These plans work well for those who choose traditional Medicare coverage under Parts A and B for their hospital and medical healthcare needs.

Person wearing white coat and blue gloves holding pill, with many pills spread on a glass table.

Image source: Getty Images.

The other way to get drug coverage is through a Medicare Advantage plan. Rather than requiring their customers to get separate Part D coverage, some insurance companies that offer Medicare Advantage plans integrate drug coverage into the same policy that covers hospital and medical costs. Having an integrated option can be simpler for Medicare participants to manage than having separate coverage, but you'll also want to consider the other pros and cons of each choice.

2. Consider the total cost of your drug needs

The easiest way to compare different drug coverage options is by looking at the monthly premiums they charge. You can find Part D plans that have extremely low premiums, while other plans can charge a fairly hefty monthly premium payment for coverage.

However, your main goal is minimizing your total cost for prescriptions, not your premium payment. For instance, if you need a drug that costs $100 a month and you have Part D coverage with a $0 premium but that doesn't include that particular treatment, then you'll pay a total of $1,200 over the course of the year. If a competing Part D plan has a premium of $30 per month but offers that drug with just a $20 copay, then you'd pay just $600 overall. In that case, you'd prefer the second plan -- even though at first sight, it looks like the more expensive choice just from a premium standpoint.

3. Look up whether a plan covers your particular drugs

Getting information on Medicare options can seem challenging, but there are tools to help you. Providers of Part D plans and Medicare Advantage plans that include drug coverage are required to disclose the specific drugs that they cover. If you have a list of prescriptions you're taking now, comparing it to the list of covered drugs is crucial to avoid any nasty surprises after it's too late to change plans.

In addition, some plans also have tiered coverage under which you might be less for generic versions of drugs compared to brand-name prescriptions. If you take a lot of generic drugs, then these options can be less expensive for you than plans that charge a consistently higher amount regardless of whether you take a generic or brand-name drug.

4. Think about the future

Picking coverage has to look at your current needs, but you should also keep in mind what you might need in the future. Health conditions change, and someone who has no prescriptions one year might suffer an illness that requires multiple prescriptions the next. The benefit of open enrollment is that you can move freely from plan to plan annually, but you'll want to make sure that the plan you choose won't leave you struggling if an unexpected illness or injury requires unanticipated prescription drugs.

Get what you need at the lowest cost

Medicare is an essential program for those in retirement, but it takes some work to manage your Medicare coverage effectively. By looking at your prescription drug coverage during open enrollment, you'll be able to match up your coverage to your current needs at the lowest possible cost.