Except the word "paid" does not appear anywhere in that reference:

(i) The specified premiums less the premium tax credit attributable to the specified premiums; 

And the definition of "specified premiums" in 1.162(l)-2 seems to be referring to the situation where the policy also covers non-dependents.  

I would let the client make the choice between protecting his pocketbook or protecting the revenue.  Most self-employed taxpayers are willing to claim benefit of the doubt when government regulation is vague.