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In this work, a multilevel coding (MLC) based coded modulation scheme with two degrees of freedom in rate flexibility is proposed and compared with a bit-interleaved coded modulation (BICM) scheme from a performance versus complexity perspective. The proposed MLC scheme is based on a rate flexible inner soft-decision polar code and utilizes an outer hard-decision staircase code structure as in the 400ZR concatenated forward error-correcting code. The performance of the MLC scheme is investigated for a range of inner code lengths, inner decoder list sizes, and signaling with 16 and 64 quadrature amplitude modulation, respectively. The MLC is designed such that a portion of the staircase encoded bits can bypass the inner code. The number of required inner soft-decision decoders can thus be reduced, thereby saving computational complexity. The proposed MLC scheme simultaneously offers up to a 53.7% reduction in the number of inner decoders and up to 0.55 dB of performance improvement when compared with the similar BICM approach. [ABSTRACT FROM AUTHOR]