Final answer:
The correct answer is Option 1, where a Non-formulary List includes medications not covered by an insurance plan, while a Formulary List includes medications that are covered, encompassing both generic and brand-name drugs deemed cost-effective and clinically effective.
Step-by-step explanation:
The difference between a Non-formulary List and a Formulary List in the context of health insurance pertains to the coverage status of medications. Option 1 is correct: A non-formulary List includes medications that are not covered by an insurance plan, while a Formulary List includes medications that are covered.
Formulary lists are developed by health insurance plans and list the drugs that are covered by the plan, often including both generic and brand-name drugs that are deemed cost-effective and clinically effective.
On the other hand, non-formulary drugs are typically more expensive or haven't been proven to be more effective compared to those on the formulary list and thus require patients to pay higher out-of-pocket costs or to go through a special approval process.