UPS Inc. and the Teamsters Union appear to be closer to finalizing a new five-year collective bargaining agreement covering about 235,000 unionized small-package workers after the union on Wednesday unveiled a new health care plan. The plan would cover more than half of the bargaining unit's members as of Jan. 1.

Under terms of the master small-package agreement ratified in June, 140,000 UPS small-package workers will transition from a company-sponsored plan to a program known as "TeamCare," a plan co-administered by UPS and the union and which represents the health care interests of UPS Teamsters in the key Central States region. However, the two sides have been at odds for weeks over the shape of the new plan. Ken Hall, who along with General President James P. Hoffa co-chairs the Teamsters' negotiating team, said the Atlanta-based company wanted a plan that would result in benefit cuts for active and retired workers, and force members to shoulder increases in premiums, deductibles, and co-pays. Hall made health care a line-in-the-sand issue in contract talks, vowing from the start that the rank and file would pay no insurance premiums, have virtually no co-payments for procedures, and have little or no deductible payments.

Concerns about Hall and his team fulfilling that vow, however, led to the rejection of 18 local supplements and riders that are attached to the national agreement. That is believed to be the largest number rejected in any contract negotiated by the Teamsters in its 110-year existence. The master small-package contract was ratified by 53 percent of the voting members, the narrowest margin of approval in the history of UPS-Teamster contracts. The first national contract was negotiated in 1979; prior to that, agreements between the two sides were hammered out at the local or regional levels.

UPS and the union have been working under an extension of their existing contract, which expired July 31. Voting on the outstanding supplements and riders could take place within the next two weeks.

Under the new health plan, UPS Teamsters will pay no premiums, no deductibles until the last year of the contract, and in many cases, no co-payments for medical, prescription, vision, dental, life, and disability insurance, according to information from several sources. There is no annual cap on the medical benefits that can be used, and the out-of-pocket ceiling of $2,000 per family is considered better than what was offered under the UPS company plan, according to the sources.

Retiree health care coverage will be available for spouses and children who would have been denied coverage under the old plan, according to sources. Spouses will be covered to age 65 or until they become Medicare-eligible, whichever occurs first. Co-pays for mail-order prescriptions have been eliminated, while dental coverage has been improved and the $1,500 annual cap has been eliminated, according to sources.

UPS declined comment, deferring to the Teamsters for any public statements.

Both sides hope that an improved health insurance plan will move the needle on ratification of the supplements and riders. As of now, only one supplement, covering a relatively small group of workers in upstate New York, has been ratified.

Because the UPS-Teamster contract is one integrated document rather than separate regional agreements, all of the rejected supplements and riders must be renegotiated and re-voted on before a national contract can be signed, according to dissident group Teamsters for a Democratic Union (TDU). A second rejection of a supplement or rider sends both sides back to the bargaining table. A third rejection, or inability to agree on a supplement or rider, means a strike vote can be taken in the affected region.

The situation at UPS Freight, UPS's less-than-truckload unit and which employs about 12,000 Teamsters, is more nettlesome. Under terms of the UPS Freight tentative agreement, which the voting rank and file rejected in June by a margin of 4,244 to 1,897, members would remain in company-sponsored health plans and would be faced with higher out-of-pocket costs. The rank and file's displeasure with the status quo was reflected in its decision to overwhelmingly reject the contract.

As with the small-package operations, UPS Freight and the union are working under an extension of their own contract, which also expired July 31.