Greg and Tanya Ridpath have two children, ages 6 years and 5 months. Their younger child, Ray, was born with a congenital heart defect that will require several major surgeries in the next few years to fully correct. Greg is employed as a salesperson for a major pharmaceutical firm, and Tanya is a stay-at-home mother. Greg’s employer offers employees a choice between two health benefit plans: 

• An indemnity plan that allows the Ridpaths to choose health services from a wide range of doctors and hospitals. The plan pays 80% of all medical costs, and the Ridpaths are responsible for the other 20%. There’s a deductible of $500 per person. Greg’s employer will pay 100% of the cost of this plan for Greg, but the Ridpaths will be responsible for paying $380 a month to cover Tanya and the children under this plan. 

• A group HMO. If the Ridpaths choose this plan, the company still pays 100% of the plan’s cost for Greg, but insurance for Tanya and the children will cost $295 a month. They’ll also have to make a $20 co-payment for any doctor’s office visits and prescription drugs. They will be restricted to using the HMO’s doctors and hospital for medical services. 

Which plan would you recommend that the Ridpaths choose? Why? What other health coverage options should the Ridpaths consider?