(a) The board shall set forth the employer contribution to the health insurance premium for each retiree class.

(b)(1) Except as provided in subdivision (2), for employees who retire after September 30, 2005, but before January 1, 2012, the employer contribution of the health insurance premium set forth by the board for each retiree class shall be reduced by two percent for each year of service less than 25 and increased by two percent for each year of service over 25 subject to adjustment by the board for changes in Medicare premium costs required to be paid by a retiree. In no case shall the employer contribution of the health insurance premium exceed 100 percent of the total health insurance premium cost for the retiree.

(2) Employees who retire on disability and apply for Social Security Disability shall be exempt from this subsection for a period of two years and thereafter if the employee is approved for Social Security Disability.

(c)(1) Except as provided in subdivision (2), for employees who retire after December 31, 2011, the employer contribution to the health insurance premium set forth by the board for each retiree class shall be reduced by four percent for each year of service less than 25 and increased by two percent for each year of service over 25, subject to adjustment by the board for changes in Medicare premium costs required to be paid by a retiree. In no case shall the employer contribution of the health insurance premium exceed 100 percent of the total health insurance premium cost for the retiree.

(2) Employees who retire on disability and apply for Social Security Disability shall be exempt from this subsection for a period of two years and thereafter if the employee is approved for Social Security Disability.

(d) For employees who retire after December 31, 2011, who are not covered by Medicare, regardless of years of service, the employer contribution to the health insurance premium set forth by the board for each retiree class shall be reduced by a percentage equal to one percent multiplied by the difference between the Medicare entitlement age and the age of the employee at the time of retirement as determined by the board. This reduction in the employer contribution shall cease upon notification to the board of the attainment of Medicare coverage.

(e) No later than October 1, 2016, the net employer contribution to the health insurance premium for employees who retire after December 31, 2011, shall not exceed the amount of the employer contribution to cover the cost of an active employee.

(f) For an employee who has elected to participate in the Deferred Retirement Option Plan (DROP), as defined under Section 16-25-150 and 36-27-170, the date the participant entered DROP is considered his or her retirement date for the purposes of Act 2011-704 only, provided that the DROP participant: (1) Does not voluntarily terminate participation in DROP within the first three years; and (2) withdraws from service at the end of the DROP participation period.