Atlanta restaurateur Steve Simon has run the numbers on health care reform. He needed the information to weigh his options.

Simon is co-founder of Fifth Group Restaurants, which operates seven restaurants and other businesses in the Atlanta area, employing more than 500 people. Currently, Fifth Group offers health insurance to its managers only.

But under the 2010 Affordable Care Act, when it is fully implemented next January, a business with 50 or more full-time workers must offer all employees working at least 30 hours a week a health plan that’s considered “affordable.’’ If it doesn’t, the business must pay a penalty.

This “employer mandate” represents a great unknown for Fifth Group, Simon says. The impact on the business could range from $50,000 to $400,000, he says.

Indeed, much of  the restaurant industry, with its many low-wage workers and its generally low rates of offering insurance, may face a financial jolt from the law.

Simon’s effort to determine potential costs is part of the frenzy of activity for business owners with 50 workers or more in calculating the impact of the insurance mandate.

Restaurants employ roughly 10 percent of the workforce both in Georgia and nationwide. While many dining establishments have fewer than 50 employees and therefore won’t be subject to the mandate, others will be affected. “There’s deep concern out there,’’ says Karen Bremer, executive director of the Georgia Restaurant Association.

“The restaurant industry understands that their most important asset is their employees,” Bremer says, but she adds that health insurance costs have spiraled out of control.

The cost of health insurance has been the No. 1 issue facing small businesses, according to surveys by the National Federation of Independent Business. “Our margins are so thin, there’s only X amount of dollars,’’ Bremer says. “If . . . [employee coverage] was affordable, you’d have everybody insured.’’

Then there’s the complexity of the new health law, which Bremer says has prompted many meetings within the industry.

“I don’t think anyone has all the answers,’’ Simon says.

Restaurants and retailers face “a delicate calculation,’’ says Bill Custer, a health insurance expert at Georgia State University. “We’re dealing with a lot of ‘what ifs.’ ’’

“There’s a lot of consultant activity as employers try to work through the numbers,’’ Custer says.

Some workers may say ‘no’

Despite all the concern in the industry, some restaurant operators say the law’s impact may not be as great as originally feared.

They cite the fact that to count as affordable coverage under the law –– thus escaping the penalty –– a business can charge workers up to 9.5 percent of their annual wages to pay for insurance. So if a worker is making $30,000 a year, the business can set his or her share of the premium at $2,850 annually, or $237.50 per month.

The restaurant owners say many workers will avoid such premiums by going without coverage, choosing instead to pay the ACA’s penalty of $95 for uninsured individuals.

Other options for these low-wage employees include joining a spouse’s plan, staying on a parent’s plan till age 26, or enrolling in Medicaid in the states that opt to expand that program.

Riccardo Ullio, who owns three restaurants in Atlanta, says that once a company offers affordable insurance, “that places the burden on the consumer himself.’’ He predicts relatively few restaurant workers will join the company plan.

Simon says that “unless no one signs up’’ for Fifth Group’s newly available coverage, the change in the law will affect the company’s bottom line. That may lead to higher prices on his restaurants’ menus, he adds.

Fast-food chains, with their large workforces, have a lot riding on the ACA’s changes. Wendy’s has stepped back from gloomy predictions about the health law, saying it will cost about $5,000 per year per restaurant, not the $30,000 the company initially foresaw. But McDonald’s estimates that each restaurant will incur between $10,000 and $30,000 in added annual costs.

The problem of part-timers

Under the health care law, the hours of a company’s part-time employees make a big difference. Affordable coverage must be offered to employees who work an average of 30 hours or more a week. That has prompted talk of reducing current workers’ hours to below 30.

The part-timer issue led to controversy last year when Darden Restaurants began experimenting by hiring more part-time workers at its Olive Garden, Red Lobster and Longhorn Steakhouse chains to see if it could cut its health costs under the new law. That created a public backlash that Darden officials say has cut into its profitability figures.

The company recently announced it would not reduce its current full-time employees’ schedules to part time, and that its new restaurants will hire some full-time hourly workers.

Some businesses will take advantage of the 30-hour loophole by limiting newly hired part-timers to 29 hours or below and allowing only the very best workers to be full time, says benefits attorney Warren Kingsley of Arnall Golden Gregory.
In his more than 30 years as a benefits lawyer, Kingsley says, “this is the most complex law I’ve ever dealt with.’’

For a business above the 50-employee threshold, the penalty for not providing workers with any coverage is $2,000 per year for each full-time employee it has, minus the first 30 employees.

But the penalties may be less punitive for employers who offer stripped-down benefits that are still considered “minimum essential coverage.”

Some restaurant companies are considering such coverage, which would offer preventive care but not such important features as surgery and hospitalization. The Wall Street Journal recently reported that a restaurant company in Texas is planning to offer the bare-bones plan.

Under this scenario, the company incurs a $3,000 penalty for each employee who rejects the limited plan and goes to the ACA’s new insurance exchange for coverage. That per-worker penalty would wind up potentially much less than the penalty for not offering coverage at all, which is assessed across the workforce.

Supporters defend law

Supporters of the Affordable Care Act, meanwhile, point out that the employer mandate affects just a small segment of businesses, noting that small firms are exempt, and that most larger companies already provide insurance.

“In Massachusetts, their employer mandate was set at 10 employees, and Massachusetts saw an increase in employer coverage,’’ says Rhett Buttle of the Small Business Majority.

Kathleen Stoll of Families USA, a consumer group that’s a staunch backer of the health law, says that those who have insurance ultimately pay – in higher insurance and medical costs — for employers that don’t cover their workers.

Companies that don’t offer insurance to their workers “freeload on the rest of us,’’ Stoll says. “I would be willing to pay a couple cents more if the person serving me or cooking the food has coverage.’’

Sandy Papadopoulos, who operates Athens Pizza in Decatur and has fewer than 15 employees, won’t face the mandate. But if he did, he says, “prices in the restaurant would have to increase dramatically, without question, across the board.’’

Papadopoulos calls the law the “unaffordable health care act.”

“You don’t need to regulate employees, you need to regulate insurance companies so then people can afford it,” he says.

Jessica Blackburn, an uninsured waitress working at a small restaurant, figures “there is no chance’’ the restaurant will offer her coverage in January. “I think it would be helpful . . . [if it were available], yes.”

Restaurateur Ullio says he’s not overly concerned about the Affordable Care Act, though he adds, “I may completely change my mind next year.’’

Simon says he sees positives in the law. People who “really need insurance will have the ability to get it,’’ he says.

But he adds that the ACA also brings a high level of uncertainty for businesses. “If you do the math,’’ he says, “there are so many moving targets.’’

GHN intern Sofia Kouninis, an Emory University student, contributed to this article.