Inpatient vs. outpatient care - What's the difference?

To navigate the healthcare industry successfully and secure the proper medical treatment, it’s important to know common terminology, such as inpatient and outpatient. Knowing the difference between these terms will help you understand where to receive care and what to expect. It can also help you determine the cost of each option when choosing a health plan and estimating out-of-pocket medical expenses.

This article will walk you through the difference between inpatient and outpatient care, what factors determine each one’s costs, and what health benefits can help you pay for your treatment.

In this blog post, you’ll learn:

• The key differences between inpatient and outpatient care, including where you can receive treatment.
• How costs for inpatient and outpatient services can vary based on factors like location, medical procedure type, and coverage.
• What health benefits can help you pay for inpatient and outpatient medical expenses.

What is inpatient care?

Inpatient care is for patients with severe medical conditions who need close supervision of a physician within a hospital or inpatient facility. Typically, inpatient care involves a hospital stay of at least 24 hours, but that may vary in some cases. Patients may receive a treatment plan, meals, medication, and other services recommended by their doctor during their stay.

Depending on the length of their hospital stay and their medical condition, a patient may interact with several healthcare providers.

This can include:

• Physicians
• Nurse practitioners
• Lab technicians
• Surgeons
• Anesthesiologists
• Radiologists
• Pharmacists

Patients receiving inpatient care can return home once their medical staff discharges them. In most cases, their doctor will provide them with discharge notes that detail contact information, medication, and any outpatient care they may need to recover fully.

What types of services does inpatient care cover?

Inpatient medical procedures can range from simple surgeries to extended hospital admissions. It’s good to prepare yourself before heading in for treatment so you know what to expect in advance.

Inpatient services can include the following:

• Treatment for serious illnesses or medical issues, such as seizures, strokes, heart attacks, or infections
• A major surgery, such as an organ transplantation, hysterectomy, gallbladder removal, or heart bypass surgery
• Treatment for severe burns or a similar type of traumatic injury
• Services for serious mental health disorders
• Chronic diseases that require specialized treatment and ongoing care, such as cancer and chronic obstructive pulmonary disease (COPD)
• Extensive cosmetic surgery
• Complex surgeries
• Childbirth
• Rehabilitation services
• Cholecystectomy
• Arthroplasty
• Severe substance use disorders

How much does inpatient care cost?

The cost of inpatient hospital care can vary based on:

• The type of procedure
• Necessary treatment
• The medication needed
• The length of stay
• Hospital room charges
• Whether or not you need to see a specialist

Your state can also determine your costs. For example, in 2023, a day of inpatient care in South Dakota cost $1,747 on average, whereas in California, the price was $4,471¹.

Inpatient procedures are typically significantly more expensive than outpatient care. According to HealthCare.gov, a three-day hospital stay can cost $30,000². To offset these costs, it’s best to have medical coverage or another health benefit so you’re not stuck paying a costly medical bill entirely out of pocket.

What is outpatient care?

Outpatient care, also called ambulatory care, is any medical service or treatment that doesn’t require a hospital stay or inpatient care.

You can receive outpatient services at various medical facilities, such as:

• Hospitals
• Walk-in clinics
• An emergency room
• Urgent care facilities
• A private practice
• A doctor’s office
• Mental health centers

After you receive treatment at your chosen location, you can go home, provided you don’t have any complications or comprehensive care that may require inpatient treatment.

Outpatient medical staff includes:

• Dermatologists
• Family practitioners
• Physician assistants
• Pediatricians
• Cardiologists
• Primary care physicians

Depending on your treatment options and the services required, you may meet with other medical professionals. Most outpatient providers also perform inpatient care.

Many individuals receive regular outpatient care because it’s essential to staying healthy in the long term. A minor condition can develop into a chronic illness without regular exams and preventive services, which can result in hospitalization.

What types of services does outpatient care cover?

Most people receive ambulatory care every year. However, only some know what services qualify as outpatient treatment.

The following are a few types of outpatient care you may receive:

• Medical screenings, such as mammograms, colonoscopies, MRIs, x-rays, imaging scans, and endoscopies
• Oral surgeries, such as tonsillectomies
• Minor procedures that don’t require intensive care
• Specific treatments for chronic illnesses and other long-term medical issues
• Bloodwork, specimen collections, and other lab tests
• Chemotherapy and radiation treatment
• Consultations with a specialist doctor
• Minor emergency care that doesn’t require admittance into a hospital for treatment
• Rehabilitation, occupational, and physical therapy
• Routine physical exams
• Same-day treatment at an urgent care facility
• Vasectomies

How much does outpatient care cost?

Outpatient care costs are a combination of doctor fees, necessary treatment for your medical condition, and any testing you receive. Like inpatient care, your location and where you’ve chosen to receive care, such as an urgent care center or hospital, can also impact your potential costs. According to Medicare.gov’s procedure price lookup tool, the average total cost to remove a full-arm cast in an ambulatory surgical center is $77. However, the same procedure at a hospital would cost $308, which is a 300% increase³.

Your health insurance plan will also affect your price. If you have a gold or platinum health plan, you will pay a higher monthly premium but have lower out-of-pocket expenses at in-network facilities thanks to lower annual deductibles.

The Affordable Care Act (ACA) also requires all major medical plans to cover essential health benefits, like hospitalization, emergency services, and laboratory testing. While some of these benefits have varying out-of-pocket costs, most types of health plans fully cover other benefits, like preventive care, even before you meet your deductible. Once you reach your annual out-of-pocket limit, your plan will cover 100% of essential benefits.

What health benefits cover inpatient and outpatient care costs?

The main difference between inpatient and outpatient care is that inpatient care typically involves a hospital stay, and outpatient care doesn’t. However, both have out-of-pocket costs.

Let’s explore three popular health benefits that can cover a wide range of inpatient and outpatient costs.

Traditional health insurance

Whether you have a group health plan through your employer or an individual plan purchased on a public or private exchange, having a health insurance plan is the best way to curb out-of-pocket costs relating to inpatient and outpatient medical services.

In all cases, you’ll pay a premium to keep your health plan active, generally monthly or annually. Several factors — such as age, ZIP code, and tobacco use — will determine your premium cost. Additionally, most plans also have a set deductible, copayment, coinsurance, and an annual out-of-pocket maximum.

What your insurer considers a covered service and how much you’ll pay out-of-pocket will depend on your health plan. You’ll pay for your medical care, whether inpatient or outpatient, until you meet your deductible. Once you meet it, your health insurer will share costs with you in the form of coinsurance. If you hit your out-of-pocket maximum, your insurance company will pay 100% of your medical expenses until the plan year ends.

If you’re expecting to use a lot of medical care, compare health plans to determine your covered services in addition to your deductible, copay, coinsurance, and out-of-pocket maximum amounts to help you choose the right one for your needs and budget.

Health reimbursement arrangements (HRAs)

Another health benefit your employer may offer is a health reimbursement arrangement (HRA). An HRA is a formal health benefit that allows you to receive tax-free reimbursements from your employer for qualified out-of-pocket medical costs. Depending on the type of HRA, your individual health insurance premiums are also eligible for reimbursement.

Reimbursable expenses relating to inpatient and outpatient care include:

• Chiropractic care
• Prescription drugs
• Doctor visits
• Surgeries
• Physical and mental health treatment
• Test kits
• Wound care
• Medical equipment

HRAs are easy to understand. Your employer gives you a monthly allowance to pay for medical expenses. Only employers can contribute to an HRA, so you’re not responsible for funding it. Once you make an approved purchase, you submit documentation proving you paid for the service or item, and your employer reimburses you up to your allowance.

With a stand-alone HRA, you choose the individual health plan that best works for you and your family. Your reimbursements will be tax-free as long as your health plan provides minimum essential coverage (MEC).

If your employer is administering your HRA with PeopleKeep by Remodel Health, unused funds won’t roll over annually. However, funds do accumulate by rolling over from month to month.

The following are three types of HRAs that your employer can offer with PeopleKeep:

1. The qualified small employer HRA (QSEHRA). A QSEHRA is a stand-alone HRA for organizations with fewer than 50 full-time equivalent employees (FTEs). The IRS sets maximum annual contribution limits; however, there are no minimum limits. Full-time W-2 employees are automatically eligible to participate in a QSEHRA. Your employer can reimburse you for only insurance premiums or premiums plus other out-of-pocket expenses.
2. The individual coverage HRA (ICHRA). An ICHRA is another stand-alone HRA, but it’s available to employers of all sizes. Unlike the QSEHRA, the ICHRA has no maximum contribution limits. You can opt in or out of an ICHRA, depending on affordability. However, if you opt in, you must have a qualifying form of individual health coverage to participate.
3. The group coverage HRA (GCHRA), also known as an integrated HRA. If your employer offers a traditional group health plan, they can supplement it with a GCHRA. With a GCHRA, your employer can reimburse you for out-of-pocket costs your group plan doesn’t fully cover, like deductibles and coinsurance. But premiums are ineligible for reimbursement. Like an ICHRA, GCHRAs have no maximum contribution limits. Also, only employees enrolled in their employer’s group plan can participate in the benefit.

Health and wellness stipends

A health stipend is another option your employer may add to your health benefits package. Health stipends work similarly to an HRA but with fewer regulations. Essentially, your employer offers you a set amount of money to spend on medical services and items.

Like all employee stipends, health stipends are taxable. However, they have no minimum or maximum contribution limits, so they’re valuable if you need financial assistance to pay for medical care. Stipends can work alongside other health benefits, including traditional group plans, individual plans, and HRAs. Better yet, every type of employee is eligible to participate, including international workers and 1099 contractors.

Some expenses a health stipend can cover are:

• Over-the-counter medication
• Ambulance and emergency services
• Birth control
• Health-related cosmetic surgery
• Health insurance premiums
• Dental and vision costs

Your employer also has the option of offering you a wellness stipend. Unlike a health stipend, wellness stipends typically don’t pay for healthcare costs. Instead, you can use a wellness stipend to cover various services and programs that encourage healthy living, such as meditation programs, gym memberships, and wearable fitness trackers.

Conclusion

Medical care in the U.S. can be expensive. To avoid surprise bills and potential debt, knowing the difference between inpatient and outpatient care can help you choose the right health plan, prepare for medical treatment, and budget for out-of-pocket expenses.

With an HRA, an employer can help you better afford your medical expenses, including inpatient and outpatient care costs. If you're an employer looking to provide your employees with a customized health benefit, PeopleKeep by Remodel Health can help. Contact our HRA specialists to learn more!

This blog article was originally published on April 10, 2024. It was last updated on November 17, 2025.

1. Hospital Expenses per Adjusted Inpatient Day

2. Why health insurance is important

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