Lowest Cost Silver Plan (LCSP)

The Lowest Cost Silver Plan (LCSP) is the cheapest Silver-tier health plan available to a specific individual through their state's ACA Marketplace. The LCSP serves as the federal benchmark used to determine whether an offer of ICHRA coverage is "affordable" under the ACA's employer shared responsibility rules.

CHOICE (Custom Health Option and Individual Care Expense) Arrangement is the current name for what was previously referred to as an ICHRA (Individual Coverage Health Reimbursement Arrangement). This page uses both terms.

Why the LCSP matters for ICHRA affordability

Under 26 CFR §54.9815-2711(d), an ICHRA is treated as affordable for §4980H purposes if:

(employee's monthly cost for the LCSP for self-only coverage) − (monthly ICHRA allowance) ≤ 9.96% × (employee's household income or safe-harbor proxy) ÷ 12

The 9.96% is the 2026 required-contribution percentage set by IRS Rev. Proc. 2025-25. Three rate-area-specific safe harbors are available for household income (W-2, rate of pay, federal poverty line. See Rate of Pay Safe Harbor).

How LCSP is determined

LCSP is person-specific. It depends on:

• Rating area: the employee's primary residence determines which insurer service area applies.
• Age: Silver-tier premiums scale by age (age is locked in as of the first day of the ICHRA plan year, or the employee's first day of eligibility, subsequent mid-year birthdays don't change the calculation for that plan year).
• Tobacco use: for affordability testing, employers use the non-tobacco LCSP rate.
• Self-only coverage: affordability is always measured against the employee's self-only premium, not family coverage.

Where to find LCSP rates

Employers can pull current LCSP rates for any ZIP code and age from the HealthCare.gov plan compare tool or, for state-based exchanges, from each state's marketplace. For ICHRA administration, third-party platforms typically pull and refresh LCSP rates automatically per employee per plan year.

Common pitfalls

• Using Bronze or Gold premiums. The §4980H affordability test specifically references the LCSP: not the Lowest Cost Bronze, Cheapest Plan Available, or any other variant.
• Using employee + spouse or family premiums. Always use the self-only LCSP figure for affordability, even when the ICHRA reimbursement applies to family coverage.
• Using prior-year LCSP after a renewal. Premiums refresh every plan year. Recalculate affordability when the plan year begins.

Citations: 26 CFR §54.9815-2711(d) (ICHRA final rule, 84 Fed. Reg. 28888); IRS Rev. Proc. 2025-25 (2026 affordability percentage of 9.96%).