Abstract. The melting of sea ice floes from the edges (lateral melting) results in open-water formation and subsequently increases absorption of solar shortwave energy. However, lateral melt plays a small role in the sea ice mass budget in both hemispheres in most climate models. This is likely influenced by the simple parameterization of lateral melting in sea ice models that are constrained by limited observations. Here we use a coupled climate model (CESM2.0) to assess the sensitivity of modeled sea ice state to the lateral melt parameterization in preindustrial and 2×CO2 runs. The runs explore the implications of how lateral melting is parameterized and structural changes in how it is applied. The results show that sea ice is sensitive both to the parameters determining the effective lateral melt rate and the nuances in how lateral melting is applied to the ice pack. Increasing the lateral melt rate is largely compensated for by decreases in the basal melt rate but still results in a significant decrease in sea ice concentration and thickness, particularly in the marginal ice zone. Our analysis suggests that this is tied to the increased efficiency of lateral melting at forming open water during the summer melt season, which drives the majority of the ice–albedo feedback. The more seasonal Southern Hemisphere ice cover undergoes larger relative reductions in sea ice concentration and thickness for the same relative increase in lateral melt rate, likely due to the hemispheric differences in the role of the sea-ice–upper-ocean coupling. Additionally, increasing the lateral melt rate under a 2×CO2 forcing, where sea ice is thinner, results in a smaller relative change in sea ice mean state but suggests that open-water-formation feedbacks are likely to steepen the decline to ice-free summer conditions. Overall, melt processes are more efficient at forming open water in thinner ice scenarios (as we are likely to see in the future), suggesting the importance of accurately representing thermodynamic evolution. Revisiting model parameterizations of lateral melting with observations will require finding new ways to represent salient physical processes.