Are you installing the sheet rock yourself?

Tall order leaving the ceiling exposed. The rafters aren't designed to be exposed - they can be painted but the wood is very porous and it will take several coats to get it looking nice and consistent.

You could keep running the sheet rock all the way up to the plywood ceiling. It would cover most of it but there you probably just need to paint the rest of the insulation.

If the ceiling is low, leaving it open may add some height, but it also means every imperfection in the wood rafters will be closer to the eye. You could consider something along these lines.

Thanks for your reply! Not installing the sheet rock myself, it was installed during construction but basement left unfinished otherwise (joints weren't plastered which is what I am doing myself now). We don't plan on staying here too many years, so I wanted to simply paint the walls and concrete to reduce dust and make it a simple, but cleaner, workout space. Therefore esthetics and visible imperfections aren't a concern. I don't know if it is visible in the picture, but the insulation isn't really a hard foam, it's fluffy and falls to the ground, which is why I would like to hide it a little, but I don't think it can be painted, it's kinda loose... We don't want to cover the ceiling because we want to basement to remain "unfinished" to not cause an increase in property tax.

I see, and I can understand your dilemma. If it's loose enough you may be able to vacuum it or just scrape it off. Though you probably don't want to spend a lot of time messing with it since the dust is part of the annoyance. Wish I could be of more help!

You could add a piece of drywall on the ceiling, say 12" wide with a j-mold or l-bead. Blocks view of insulation yet allows you to inspect and access later.