How do Medigap, Medicare Advantage plans differ?

Dear Toni: I have original Medicare with a supplement, and in October, I was taken by ambulance to the emergency room for heart issues. I was surprised when I signed a hospital form stating that I was "under observation," as the doctor decided whether to admit me as an inpatient or send me home. I was lucky that he sent me home.

During this year's annual enrollment period, my husband, Alan, enrolled in a Medicare Advantage HMO for the first time. Can you please explain how this rule could affect his hospital stay since he is no longer in Medicare with a supplement. — Sybil, Tampa, Fla.

Dear Sybil: The Medicare outpatient observation notice rule only affects those who are enrolled in original Medicare (with or without a supplement). The rule does not affect those enrolled in a Medicare Advantage plan.

However, a Medicare Advantage HMO plan has its own process for inpatient and outpatient surgery, or hospital stay with a referral-only system. With a Medicare Advantage PPO plan, there is not a referral process, but the facility or provider must be willing to bill the plan.

Here are the differences between a Medicare Advantage plan and a supplement with original Medicare:

Medicare supplement

1. A Medicare supplement or Medigap plan works directly with original Medicare. Medicare will pay its share of the approved amount for "medically necessary" covered health care costs. Then your Medicare supplement/Medigap will pay its share.

2. You can choose your doctor, hospital, home health agency, skilled nursing facility, etc., so long as it accepts Medicare assignment. You and your health care provider are in control of your health care.

3. With a Medicare supplement/Medigap, you have a monthly premium that may increase each year.

4. You may enroll in, and will pay separately for, a stand-alone Part D prescription drug plan.

Medicare Advantage

1. To qualify for the plan, you must be enrolled in Medicare Parts A and B and live in the service area at least six months out of a year.

2. When you choose a Medicare Advantage plan, then Medicare pays the insurance company a certain amount every month for your care.

3. When you go to the doctor or visit your pharmacist, you must use your Medicare Advantage insurance card, not your Medicare card.

4. A Medicare Advantage Plan must provide all your Part A and Part B benefits, and most Medicare Advantage Plans include Part D prescription drug plans. If the drug plan is included, you don't have an independent choice in drug plans.

5. With a Medicare Advantage plan, you may have different copays, coinsurances, deductibles and maximum out-of-pocket expenses.

6. Talk to your provider or facility to make sure they accept the Medicare Advantage plan you want to enroll in.

Toni King is an author and columnist on Medicare and health insurance issues. If you have a Medicare question, email [email protected] or call 832-519-8664.