The director shall promulgate any necessary rules for the effective administration of the provisions of this article. Except as specifically provided in subsection (e), section four of this article, all rules of the Public Employees Insurance Agency and all hearings held by the Public Employees Insurance Agency are exempt from the provisions of chapter twenty-nine-a of this code. Any rules promulgated by the public employees insurance board or director shall remain in full force and effect until they are amended or replaced by the director.

The rules shall provide that any employee of the state who has been compelled or required by law to retire before reaching the age of sixty-five years is eligible to participate in the public employees' health insurance program at the premium contribution established by the finance board after any extended coverage to which he or she, his or her spouse and dependents may be entitled by virtue of his or her accrued annual leave or sick leave, pursuant to the provisions of section thirteen of this article, has expired. Any employee who voluntarily retires, as provided by law, is eligible to participate in the public employees' health insurance program at the premium contribution established by the finance board after any extended coverage to which he or she, his or her spouse and dependents may be entitled by virtue of his or her accrued annual leave or sick leave, pursuant to the provisions of section thirteen of this article, has expired: Provided, That the employee's last employer is a participating employer. The dependents of any deceased retired employee are entitled to continue their participation and coverage upon payment of the premium contribution established by the finance board. In establishing the cost of health insurance coverage for retired employees and their spouses and dependents, the finance board, in its discretion, may cause the claims experience of the retired employees and their spouses and dependents to be rated separately from that of active employees and their spouses and dependents, or may cause the claims experience of retired and active employees, and their spouses and dependents, to be rated together.

Any employee who is on a medical leave of absence, approved by his or her employer, is subject to the following provisions of this paragraph, is entitled to continue his or her coverage until he or she returns to his or her employment, and the employee and employer shall continue to pay their proportionate share of premium costs as provided by this article: Provided, That the employer is obligated to pay its proportionate share of the premium cost only for a period of one year: Provided, however, That during the period of the leave of absence, the employee shall, at least once each month, submit to the employer the statement of a qualified physician certifying that the employee is unable to return to work.

Any retiree is eligible to participate in the public employees' life insurance program, including the optional life insurance coverage as already available to active employees under this article, at his or her own expense for the cost of coverage, based upon actuarial experience; and the director shall prepare, by rule, for that participation and coverages under declining term insurance and optional additional coverage for the retirees.