Medicare's prescription drug plans can save you a bundle. Finding the best plan, however, takes some effort. Now's your last chance to pick a better plan for 2008.

Each year, Medicare participants have the right to change the plan they've chosen for prescription drug coverage. Beginning on Nov. 15, you can name a new plan for 2008. But you have to make your decision by Dec. 31.

Some background
When Medicare's drug benefits, also known as Medicare Part D, went into effect in 2006, there was a lot of confusion about how to choose among plans. There were large plan sponsors, such as Humana (NYSE:HUM), along with smaller private sponsors, many of which offered multiple plans to seniors. The dilemma that seniors faced was that they might pick the plan that would have worked best for them over the previous year, only to find that new medical needs required a different set of drugs that weren't covered by their plans.

At the same time, shortcomings about the program became more evident as people got more experience with it. For instance, a gap in drug coverage, known as the doughnut hole, forced some seniors to pay the majority of their own drug costs on top of their monthly plan premiums. Recently, a number of plan sponsors, including WellPoint (NYSE:WLP) and UnitedHealth Group (NYSE:UNH), agreed to repay Medicare a total of $4 billion for drug overcharges in 2006. And according to AARP, some drug plans have also hiked prices for participants in the middle of the year, making it difficult to estimate costs correctly when choosing a plan.

How to choose
Despite the problems with prescription drug benefits, it's still worth it to take some time finding the right plan for you. As you'd expect, in most cases, plans with higher premiums cover more of your drug costs, while those with low or no monthly premium costs don't cover as much. If you're not currently taking medications and don't foresee a future need to do so, then low-cost plans should be sufficient. Worst case, if you have to start taking prescription drugs unexpectedly, you can change to a more comprehensive plan during open enrollment next year, limiting large payments to a single year.

If you take a number of prescription drugs, however, it gets more difficult to choose. Certain plans might cover some of the drugs you need but not all of them. But there are a number of resources to help you choose. At Medicare's website, you'll find a plan finder that will help you choose a plan based on a number of factors, such as what drugs are covered, how much you can afford to pay, and what pharmacies participate. Another tool lets you enter the drugs you need and then shows you what plans cover them.

In addition, drugstore chains give people ways to decide on a Medicare Part D plan. CVS Caremark (NYSE:CVS) and Rite Aid (NYSE:RAD) have tools to advise you on how to find the plan that will cost you the least, and Walgreen (NYSE:WAG) will send you a customized report based on your personal information and medical history.

You can do it
Even with all these resources, it's up to you to make the choice you're comfortable with. As confusing as Medicare Part D and all the available plans may be, you owe it to yourself to understand how they work and what they'll cover, so you take full advantage of the benefits you deserve. A little hard work and perseverance now will make a big difference in how much you pay over the long run.

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Fool contributor Dan Caplinger won't be eligible for Medicare anytime soon. He doesn't own shares of any companies mentioned in this article. UnitedHealth Group is a Stock Advisor recommendation. The Fool's disclosure policy thinks you're only as old as you feel.