More than half of Americans with employer-sponsored dental benefits are “likely or very likely” to drop their coverage if their health benefits were taxed, a new study finds.

The July poll, conducted by Opinion Research Corporation for the National Association of Dental Plans, determined that 38% of Americans will drop their “employee-only” dental benefits if those benefits were taxed at $100 per year.

Exactly 56% of Americans would drop “family” dental benefits if annual taxes of $300 were imposed, according to the study, which calculated the tax amounts using the marginal tax rate plus FICA taxes on the average annual premiums for employer-provided dental plans (for example, $1,000 for families and $300 for individuals).

The study signals yet another concern as Congress and President Barack Obama move closer to comprehensive health reform, which in its most recent form includes taxing some health benefits.

Evelyn Ireland

With 97% of dental benefits in the United States provided through employers and other groups, the poll results indicate that 81.7 million Americans are likely to join the ranks of the dentally uninsured if these benefits are taxed, according to the study’s authors.

The authors suggest that increases in taxpayer supported public dental programs such as Medicaid and the Childrens’ Health Insurance Program (CHIP) would likely follow since 44% of Americans with dental benefits are in households with incomes of $50,000 or less. Many adults in these households would simply remain uninsured as only nine states now provide adult dental Medicaid benefits.

“These results are alarming,” said Evelyn Ireland, executive director of the National Association of Dental Plans. “Three decades of steady increases in Americans with dental coverage and parallel improvements in oral health would be wiped out by taxation of dental benefits. The impact of taxation falls heaviest on families.”