Final answer:
Option (b), Companies opt for flexible benefits packages because they cater to varied needs of employees at different life stages and help attract and retain top talent.
Step-by-step explanation:
Companies might decide to provide employees with a flexible benefits package primarily because different employees at different times in their lives have varying needs and wants. For example, younger employees might prioritize flexibility in work scheduling or more training opportunities, as seen with millennial expectations, while older employees might value a more robust health insurance plan or retirement saving options.
Furthermore, insurance companies benefit from dealing with a larger pool of clients and can negotiate lower rates for healthcare services, which can support the customization of benefits packages. This negotiation with healthcare providers also increases the consumers' benefit of becoming insured and yields cost savings for the insurance company, which can then tailor packages to different employee demographics.
In addition to meeting diverse needs, flexible benefits packages also align with strategies to attract top talent, such as millennials who seek companies that provide extensive benefit choices. Companies recognize that by offering these personalized benefits, they can enhance their brand appeal and staff retention. Moreover, providing health insurance through an employer helps solve the adverse selection problem by mixing people with varying health risks, which is beneficial to insurance companies.