The Lowest-Cost Silver Plan, Explained

Last updated September 8, 2026

Naming note: On September 3, 2026, CMS and the SBA renamed ICHRA to CHOICE Arrangement (Custom Health Option and Individual Care Expense).

What it is

Every CHOICE Arrangement affordability calculation runs on one number: the lowest-cost silver plan premium, or LCSP. The LCSP is the cheapest silver-tier plan available on the exchange for self-only coverage in a given rating area, at a given age. Silver means roughly 70% actuarial value, the middle of the metal tiers. The affordability test takes that premium, subtracts your allowance, and measures the remainder against an income cap. Work with your broker or a dedicated CHOICE Arrangement expert to ensure you remain compliant.

It is not the benchmark plan

The subsidy system runs on a different plan: the second-lowest-cost silver plan, which sets premium tax credit amounts. Employer affordability runs on the lowest. One position apart on the same price list, two different jobs, and a constant source of confusion. When someone quotes you "the benchmark," ask which one they mean.

The three dials

Rating area

Every state is carved into rating areas, usually counties or metro clusters. The employer safe harbor uses the rating area of the employee's primary worksite. The employee's own tax credit test uses the rating area where they live.

Age

The premium is priced at the employee's age on the first day of the plan year, or the first day of eligibility for midyear hires. The federal age curve runs from 1.0 at age 21 to 3.0 at 64. (Note: New York and Vermont ignore age entirely.)

Plan year

A calendar-year CHOICE Arrangement may use the premium from January of the prior calendar year, so 2027 plans test against January 2026 rates. Non-calendar-year plans use January of the current year.

Four things that trip people up

The LCSP can change

The LCSP is whichever plan is cheapest that year. A new carrier entering your market can take the spot with a lower premium even while prices rise overall. You are tracking a position, and the position resets every January.

Nobody has to buy it

The LCSP is often the narrowest-network HMO in the market. Your employees will usually pick something that costs more, so judge the adequacy of your allowance against what they actually buy, and judge compliance against the LCSP.

Tobacco rates do not apply

Multi-state employers must manage a matrix. Fifty employees across twelve rating areas means twelve age curves. There is no single company-wide LCSP.

FAQ

Is the lowest-cost silver plan the same as the ACA benchmark plan?

No. The benchmark plan is the second-lowest-cost silver plan and sets premium tax credits. The lowest-cost silver plan sets CHOICE Arrangement affordability.

Does the employee have to enroll in the LCSP?

No. Any qualifying individual coverage works with the CHOICE Arrangement. The LCSP exists only to measure affordability.

Which age applies to a midyear hire?

The employee's age on the first day their CHOICE Arrangement can take effect, in the rating area that applies to them at that time.

Sources

• IRS Q&A on individual coverage HRAs and the Employer LCSP Premium Look-up Table
• Proposed Treasury Regulations under Code section 4980H (September 30, 2019)
• HHS, Treasury, and DOL final rules on health reimbursement arrangements (June 2019)
• KFF, 2026 marketplace premium data

This article is for general information only. It is not tax, legal, or accounting advice, and Benepicks does not provide tax or legal advice. Rules change and individual facts matter. Confirm anything you rely on here with your CPA, attorney, or benefits counsel before acting on it.