Candy Inc. offers two health insurance plans to its employees

It was a very tricky question that left almost all of us ponder. Speaking of pondering, let's acknowledge the fact that this is a weaken question so we should focus on the conclusion of the argument, and I would suggest that when the prompt says "undermine the argument/reasoning" we need to go deeper than just weaken.

I am just giving my try, to help explain what I think and I am open for debate so that you can also scrutinise my reasoning.

Almost all correct answers in weaken questions rely on attacking the conclusion. So let's focus on the conclusion by companies executives, who states :

IMO, the executives fail to address all the possibilities that could be the reason for what the situation is in the company. The executives may have incomplete information or they rely on evidence (here, gym reports) as the only source of data and thus, the correct answer choice would introduce new possibilities.

This is exactly what option E does. Let me reproduce it again :

This choice states that ALL the employees are allowed to select between the two plans available "at the beginning of each year" and this means that all of them have equal opportunity to select one plan, which they think would be better financially. Every employee knows about the financial incentive "at the beginning of each year" (there is a reason I am stating and underlining it twice) that the variable plan offers, but still some go with the fixed plan (maybe because they know they are too lazy to attend the fitness classes or for some other reason) and others go with the variable plan. So it would be incorrect to say that modest financial incentive motivated these employees to change their behaviour.

Also, it may be the case that those who chose to go with variable plan ($110) were already involved in fitness activities (reverse causality of what is stated in the passage) and thus, financial incentive was just a cherry on the cake for them. Maybe these employees, who took up variable plan, were already motivated to take fitness seriously. This reasoning completely wrecks the executives claim of financial incentive.

I hope this helps.

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