What is the role of "probationary periods" in health insurance plans?

Probationary periods are specific time frames during which certain conditions may not be covered by a health insurance plan. The primary purpose of these periods is to manage risk for the insurer by limiting coverage for pre-existing or specific conditions until the insured has been enrolled in the plan for a designated amount of time. During this probationary period, policyholders may not be able to receive benefits for these specific conditions, helping to prevent cases where individuals only seek coverage for issues they already have prior to enrollment.

This practice allows insurers to mitigate the financial risk posed by insuring individuals who may have significant pre-existing health issues. Once the probationary period has passed, coverage typically becomes available without exclusions specific to those conditions, enabling access to necessary healthcare services. Thus, the function of probationary periods serves not just as a form of risk management for insurers, but also as a means of ensuring that individuals genuinely intend to stay with the insurance plan, minimizing adverse selection.