Image: Medicare.gov.

Paying for healthcare is one of the biggest challenges that older Americans face, and that's why Medicare plays such an important role in the finances for those 65 and older. Yet Medicare can't insulate seniors from all of the increasing cost of healthcare, and those who need prescription drugs face the challenge of finding a Medicare Part D prescription drug plan that both meets their specific needs and is affordable.

The rising cost of Part D drug plans
That challenge is set to get a little more difficult in 2016, according to an Avalere study of data from the Centers for Medicare & Medicaid Services. The study found that the average American who uses Medicare Part D for their prescription drug coverage paid an average of $466 in annual premiums during 2015. For 2016, that cost is expected to rise by more than 6% to $496.

Even worse, premium costs will go up even more dramatically among some of the most popular plans in the country. According to the study, the 3.5 million Americans on the AARP MedicareRx Preferred Plan will see its premium rise from $602 to $749 on an annual basis, a climb of 21% from 2015's costs. Another AARP with almost 1.4 million participants will see even more dramatic increases of 26% to their premium costs. Two popular plans from Humana (NYSE:HUM) will also impose cost hikes of between 8% and 17% on their 3.2 million participants, although both plans will see costs remain well below the overall average.

Increased premiums for drug coverage reflect the higher expenses that the Medicare program has shouldered in paying for prescription drugs. High prices for specialty medications played a significant role in double-digit increases in Part D benefit costs for Medicare, according to the most recent report from the trustees that oversee the Medicare system, and those trends are likely to continue as drugmakers seek to earn profits from their higher-end products.

How to beat higher Part D plan costs
Yet despite the trend toward higher premium costs for prescription drug coverage under Medicare, there are some things you can do to fight back. The most obvious is to take advantage of the coming open enrollment period, which begins on October 15, to look for plans that have a better combination of premium costs and coverage options. Different plans can provide much different amounts of financial support for your drug costs depending on the specific prescriptions you have. As difficult as it can be to work through all the factors involved, discovering a lower cost plan that still meets your coverage needs is possible, and the effort can pay off in substantial savings.

Bear in mind, though, that you can't only focus on premium costs. You also have to look at copayments and deductibles to put together a total-cost estimate over the course of the year. Sometimes, it makes sense to pay a higher premium for coverage if it saves you more in out-of-pocket costs when you actually buy your prescription drugs. Conversely, accepting slightly higher out-of-pocket costs can make sense if the premium savings outweigh the extra expense down the road.

Looking at Medicare Advantage
The other surprising option open to Medicare participants is to consider a Medicare Advantage plan. These plans often include drug coverage along with the same basic services that original Medicare offers for hospital and medical coverage, and according to Avalere, the average Medicare Advantage premium will actually decline by 1% next year to an annual cost of $391.

At first glance, it's not obvious why Medicare Advantage would be able to cut premium costs at the same time that stand-alone Part D plans were raising them. Yet some point to the competitive nature of the Medicare Advantage program as offering better options to allow Medicare participants to reduce their overall risk.

A higher cost for prescription drug coverage is the last thing that older Americans need to face, but it doesn't have to destroy your retirement finances. Between shopping for other Part D plans and Medicare Advantage, you might be able to rein in your healthcare costs to a far greater extent than you thought.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.