Second Lowest Cost Silver Plan (SLCSP)

Second Lowest Cost Silver Plan (SLCSP): What It Means for Health Coverage

The Second Lowest Cost Silver Plan (SLCSP) is the benchmark Marketplace health plan used to calculate how much premium tax credit you may receive. You don’t have to enroll in that plan, and it isn’t automatically the second-cheapest option shown on every shopping screen.

The benchmark is personal to your tax household. It can change with your family members’ ages, home address, coverage months, and who actually qualifies for Marketplace coverage.

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Learn what the Second Lowest Cost Silver Plan (SLCSP) is, how it determines Marketplace premium tax credits, and what it means for employees and employers.

What is the Second Lowest Cost Silver Plan?

Marketplace plans are grouped into metal levels: Bronze, Silver, Gold, and Platinum. These labels describe how costs are generally split between the plan and its members; they don’t rate the quality of care.

For premium tax credit purposes, the Marketplace identifies the second-lowest-priced Silver plan available to the eligible members of your household in your area. That premium becomes the benchmark in the federal tax-credit formula described in the Internal Revenue Service’s Instructions for Form 8962, Premium Tax Credit.

Three points clear up most confusion:

• “Second lowest cost” refers to the premium, not the deductible or total amount you might spend on care.
• The SLCSP isn’t necessarily the plan you bought.
• Your tax credit can be applied to another Marketplace plan, although the amount remains tied to the benchmark calculation.

If you qualify for cost-sharing reductions, you generally must choose a Silver plan to receive those extra savings on deductibles, copayments, and coinsurance. Cost-sharing reductions are separate from the premium tax credit, as explained in the Centers for Medicare & Medicaid Services’ Marketplace Eligibility and Enrollment guidance.

How does the SLCSP work in practice?

In simple terms, the Marketplace compares the monthly SLCSP premium with the amount your household is expected to contribute based on income. The difference generally determines your advance premium tax credit, subject to eligibility rules.

Suppose Maya works for Willow Design, a 10-person company. For illustration, her applicable SLCSP costs $620 per month, and the Marketplace calculates that her expected household contribution is $270:

• $620 benchmark premium
• Minus $270 expected contribution
• Equals a potential $350 monthly premium tax credit

Maya could choose a $580 plan and apply up to $350, leaving a $230 premium. If she chooses a $700 plan, the same credit would leave $350. Final amounts are reconciled on her federal tax return using Form 8962 and the information on Form 1095-A, Health Insurance Marketplace Statement.

Now assume Willow Design offers each eligible employee a $300 monthly allowance through an Individual Coverage Health Reimbursement Arrangement (ICHRA). That offer can change Maya’s premium-tax-credit eligibility. ICHRA affordability is tested using the lowest-cost Silver plan available to her—not the SLCSP—minus the employer’s allowance. Mixing up those two Silver-plan figures is an easy and potentially expensive mistake. The governing framework appears in the federal HRA final rules and Internal Revenue Service guidance on individual coverage HRAs.

Who does the Second Lowest Cost Silver Plan apply to?

The SLCSP primarily matters to people who buy qualified health coverage through the federal or a state Health Insurance Marketplace and claim the premium tax credit. It can matter whether the credit is paid in advance each month or claimed when filing taxes.

For employees, an offer of affordable employer-sponsored coverage that meets minimum value generally blocks premium tax credits, even if you decline that offer. Offers through an ICHRA or a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) have their own coordination rules, so don’t assume an allowance and a full Marketplace subsidy can simply be stacked.

For employers, the benchmark matters indirectly. Your coverage offer, allowance design, and reporting can affect whether employees qualify for credits and, for an applicable large employer, whether an employer shared responsibility payment may be triggered under Internal Revenue Code Section 4980H.

If you’re uninsured, the SLCSP can still matter when you apply during Open Enrollment or after a qualifying life event opens a Special Enrollment Period. The Marketplace determines the benchmark and your eligibility when you submit the application; you don’t need to identify the plan yourself first.

What does the SLCSP cost an employer?

The Second Lowest Cost Silver Plan doesn’t create a bill for an employer. It’s a Marketplace benchmark, so you don’t pay that premium unless you’ve separately promised to reimburse an employee for individual coverage.

Your real cost depends on the benefit you offer. With an Individual Coverage Health Reimbursement Arrangement (ICHRA), you set an allowance and reimburse eligible expenses up to that cap. A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) also has employer-funded limits, including annual limits set by the Internal Revenue Service (IRS).

For applicable large employers—generally those averaging at least 50 full-time employees, including full-time equivalents—the bigger financial issue is the employer shared responsibility rules. For 2026, IRS Revenue Procedure 2025-25 sets the affordability percentage at 9.96%. An employer can usually use one of three regulatory safe harbors—federal poverty line, rate of pay, or Form W-2 wages—to test the employee’s required contribution without knowing household income.

Compliance duties, deadlines, and possible penalties

The benchmark itself creates no notice or filing deadline. Duties arise from the coverage arrangement around it.

• An ICHRA generally requires a notice at least 90 days before the plan year begins. Someone who becomes eligible later generally receives it by the date coverage can begin.
• A QSEHRA notice is generally due at least 90 days before the year, or on the date a newly eligible employee becomes eligible. The employer must also report the permitted benefit on Form W-2.
• Applicable large employers generally furnish Form 1095-C to employees by March 2 following the coverage year and file Forms 1094-C and 1095-C with the IRS by February 28 on paper or March 31 electronically, adjusted for weekends and holidays. Employers filing at least 10 information returns in aggregate generally must file electronically.

These requirements come from the Departments of the Treasury, Labor, and Health and Human Services’ 2019 HRA Final Rule, Internal Revenue Code Section 6056, and the IRS Instructions for Forms 1094-C and 1095-C.

For 2026, IRS Revenue Procedure 2025-32 lists annual employer shared responsibility payment amounts of $3,340 per full-time employee under Section 4980H(a) and $5,010 per affected full-time employee under Section 4980H(b), calculated monthly. The first can apply when an applicable large employer fails to offer qualifying coverage to enough full-time employees and at least one receives a premium tax credit. The second can apply employee by employee when an offer is unaffordable or lacks minimum value. Late or incorrect information returns can create separate penalties under Sections 6721 and 6722.

What does the benchmark mean for an employee’s paycheck and choices?

A Marketplace credit usually lowers what you pay the insurer each month; it isn’t extra cash in your paycheck. If your employer reimburses premiums tax-free through an HRA, the reimbursement also generally isn’t taxable wages, but the offer may reduce or eliminate your premium tax credit.

An affordable ICHRA generally makes you ineligible for the credit for those months, even if you opt out. If it’s unaffordable, you can opt out and potentially use a Marketplace credit instead. A QSEHRA follows different coordination rules, so its benefit may reduce the credit available to you.

If you’re currently uninsured, don’t assume a new employer allowance lets you enroll immediately. You’ll usually need Open Enrollment or a Special Enrollment Period. An ICHRA offer can provide a Special Enrollment Period in qualifying circumstances, but deadlines matter; HealthCare.gov’s Special Enrollment Period guidance explains when coverage can begin.

Worked example: employer cost and employee choice

Juniper Studio has 12 employees and offers a $500 monthly ICHRA allowance. Nine employees submit an average of $420 in eligible premiums in April:

• Reimbursements: 9 × $420 = $3,780
• Unused allowance: 9 × $80, plus 3 × $500 = $2,220
• April employer reimbursement cost: $3,780, not the full $6,000 allowance

Employee Lena pays $560 for her plan, receives $500 tax-free, and pays the remaining $60 herself. She can’t treat an unused coworker’s allowance as her own, and whether she can claim a premium tax credit depends on ICHRA affordability and her opting-out decision—not simply on her plan costing more than $500.

Common SLCSP mistakes

1. Treating the SLCSP as the employer affordability plan. ICHRA affordability uses the applicable lowest-cost Silver plan, while Marketplace premium tax credits use the second-lowest-cost Silver benchmark.

2. Assuming an employee can take both the full HRA benefit and the full premium tax credit. Federal coordination rules prevent that double benefit.

3. Using one benchmark for everyone. Household members, ages, location, coverage months, and eligibility can change the correct benchmark, so copying a coworker’s figure can produce the wrong tax reconciliation.

Frequently Asked Questions About Second Lowest Cost Silver Plan (SLCSP)

Where can I find my SLCSP amount?

Look at Part III, Column B of Form 1095-A, Health Insurance Marketplace Statement. The amounts are listed by month because your benchmark can vary during the year. If Column B is blank or looks wrong, use the federal or state Marketplace tax tool rather than substituting the premium from your own plan. The Internal Revenue Service (IRS) Instructions for Form 8962 explain how to enter monthly benchmark amounts.

Why is Column B on my Form 1095-A blank or zero?

A blank or zero doesn’t necessarily mean your form is defective. The Marketplace may omit the benchmark when no advance premium tax credit was paid or when it couldn’t determine the applicable household information. You may need to calculate the figure with the Marketplace tax tool. If other details—such as covered people or coverage months—are incorrect, contact the Marketplace and request a corrected Form 1095-A before filing.

Does my SLCSP change if I move during the year?

It can. Moving to a different rating area may change the Silver plans available and their prices, so you could have one benchmark before the move and another afterward. Report your new address to the Marketplace promptly, along with income or household changes. Your Form 8962 calculation may then use different monthly figures rather than one annual number, following the IRS Instructions for Form 8962.

Can I get a premium tax credit if I’m married but file separately?

Usually not. Married taxpayers generally must file a joint federal return to claim the premium tax credit, even if the Marketplace calculated advance assistance using the Second Lowest Cost Silver Plan. Limited exceptions exist for certain survivors of domestic abuse and people who qualify under the spousal-abandonment rules. IRS Publication 974, Premium Tax Credit, explains those exceptions and the required tax-return certification.

What happens to the benchmark if someone in my family qualifies for Medicaid or CHIP?

A family member who’s eligible for Medicaid or the Children’s Health Insurance Program (CHIP) generally can’t receive a Marketplace premium tax credit for the same months. The applicable benchmark calculation may therefore include only the household members eligible for Marketplace subsidies, not everyone on the tax return. Because eligibility effective dates can differ, check the monthly entries instead of assuming the same family benchmark applies all year.

What if two tax families share the same Marketplace policy?

This can happen after a divorce, when a parent covers a child claimed by someone else, or when household filing arrangements change. The tax families generally must allocate the policy’s premiums, benchmark premium, and advance credit between their Form 8962 filings using percentages they agree on, subject to the IRS rules. If they can’t agree, default allocation rules may apply. Form 8962 Part IV and IRS Publication 974 cover shared-policy allocations.

Does the SLCSP work differently in every state?

The federal premium tax credit formula is the same, but the underlying plans and prices aren’t. Each state has rating areas, and some states run their own Marketplace instead of using HealthCare.gov. That means identical households across a state line—or sometimes in different counties—can have different benchmark premiums. State-funded subsidies, enrollment systems, and filing requirements may also differ from the federal credit. Your federal Second Lowest Cost Silver Plan must come from the Marketplace serving your home address for the relevant month.

How is the SLCSP handled after a qualifying life event?

When marriage, birth, adoption, or another qualifying event changes who needs coverage, the Marketplace may recalculate the benchmark for the affected months. The effective date matters: you can’t generally use the larger household’s premium for months before that person joined the applicable coverage family. Birth and adoption can involve special effective-date rules, including retroactive coverage in some cases. Update the Marketplace application promptly and keep its eligibility notices; the Centers for Medicare & Medicaid Services’ Marketplace Eligibility and Enrollment regulations govern these special enrollment rules.

Do owners, part-time employees, and new hires get a different SLCSP?

Employment label alone doesn’t create a separate benchmark. An owner, part-timer, or new hire who seeks Marketplace coverage gets a household-specific figure using the same geographic and family factors as anyone else. What can differ is subsidy eligibility: an employer coverage offer may start after a waiting period, apply only to certain lawful Individual Coverage Health Reimbursement Arrangement employee classes, or receive different tax treatment for certain owners. The Marketplace application should show the offer’s start date and employee cost accurately.

Can I use the SLCSP tax credit instead of COBRA?

Usually, merely being offered continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) doesn’t block a premium tax credit; enrolling in COBRA generally does for the same months. Losing job-based coverage can open a Marketplace Special Enrollment Period, allowing you to compare the net Marketplace premium after the benchmark-based credit with the full COBRA cost. Be careful after choosing COBRA: voluntarily ending it early usually won’t create another enrollment opportunity, while exhausting COBRA may. See the Department of Labor’s COBRA continuation coverage guidance.

Can someone with Medicare still receive an SLCSP-based premium tax credit?

Generally, no credit is available for months when you’re eligible for Medicare coverage that counts as minimum essential coverage, including premium-free Medicare Part A. If you must pay a premium for Part A, the result can depend on whether you actually enroll. Marketplace coverage also doesn’t replace Medicare enrollment deadlines, and late enrollment can carry lasting penalties. Household members who aren’t Medicare-eligible may still receive benchmark-based assistance. IRS Publication 974, Premium Tax Credit, addresses government coverage eligibility month by month.

Use the Second Lowest Cost Silver Plan (SLCSP) With Confidence

Remember three things: the Second Lowest Cost Silver Plan is a benchmark for calculating premium tax credits, not a plan you’re required to buy. Its amount can vary by household, location, and month. And when employer coverage or a health reimbursement arrangement is involved, eligibility depends on the specific offer and federal coordination rules.

SimplyHRA fits small businesses, HR managers, and employees dealing with these questions because we built it after living small-business benefits problems ourselves. We’ve helped other owners and their teams set up and run Individual Coverage Health Reimbursement Arrangements (ICHRAs) and Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) without enterprise overhead, while employees choose individual coverage that fits their lives.

This article is education, not legal or tax advice. Email info@simplyhra.com or schedule a call for a consultation about employer or employee benefits.