Medicare open enrollment: 3 ways to get the best coverage at the best price

Medicare open enrollment is here, and millions of retirees are again wading into confusing waters to fish for the health insurance that best matches their needs.

How do you choose Parts A (hospitalization), B (medical insurance) and D (prescription drugs)? Should you go with Medicare Advantage (Part C)?

Here's what you can do to get the best coverage at a price that puts the least pressure on your savings.

Don't earn too much. Although Sen. Bernie Sanders, the independent from Vermont, has proposed a Medicare For All universal health care system devoid of premiums and co-payments, today's Medicare is not free.

In fact, a 65-year-old couple retiring today will face $275,000 in medical bills during retirement, according to Fidelity. And that doesn't even include long-term care.

To hold down your Medicare premiums, be careful with how much you earn before you start to take the coverage. Premiums are determined by what you made two years earlier.

"Medicare B and D rates are based on your modified adjusted gross income," says Carolyn McClanahan, a physician and financial planner in Jacksonville, Fla. "The premiums go up as income goes up."

Consider Medicare Advantage. One of the big decisions you have to make is whether to go with original Medicare (parts A and B), or Medicare Advantage (Part C), which offers plans run by private companies that are required to follow Medicare guidelines.

These plans are becoming increasingly popular. About one-third of Medicare enrollees now use Medicare Advantage, compared to only 5 percent in 2004, according to the Kaiser Family Foundation.

If you live in an area with great health care, Medicare Advantage can be an excellent deal.

"The insurance company is paid your Medicare B premium to take over all of your care, and in some plans, there are no additional premiums," McClanahan says.

What's the trade-off? They're often HMO plans, which means you are generally restricted to in-network care providers. Use the Medicare Plan Finder tool to gauge your options.

You also need to reassess your Medicare prescription drug coverage every year.

Your wallet will depend on it. Prescription drug costs are expected to soar, with annual Part D premiums likely to jump from about $490 now to around $850 in 2025, according to Medicare's Boards of Trustees.

Over the same period, Part D deductibles will increase by $200-plus, to $645.

That's why you must take an annual look at whether the drugs you need are still covered by your plan, whether it's Part D or through Medicare Advantage. And understand that drug plan premiums and deductibles can vary, so research is key.

If you have a health savings account, use it to offset rising drug costs, especially as you ease into retirement.