What is the purpose of a health insurance 'exclusion'?

A health insurance 'exclusion' serves the purpose of specifying services, treatments, or conditions that are not covered by the insurance plan. This means that any claims related to these excluded services will not be reimbursed by the insurer, leaving the insured responsible for any related costs. Understanding exclusions is vital for policyholders so they can make informed decisions about their health care and budget for potential out-of-pocket expenses.

The other options represent different aspects of health insurance. Additional benefits typically refer to services that go beyond basic coverage, not exclusions. Outlining types of prescriptions covered pertains to the formulary of a plan, which details what medications are included. Encouraging preventive care relates to wellness benefits designed to promote health and prevent illness but doesn't directly involve exclusions. Thus, specifying exclusions provides clarity on the limitations of coverage within a health insurance policy.