The board may provide, by regulation, that any annuitant or pensioner may assign his annuity or disability benefit, or any part thereof, for the purpose of premium payment for a membership for the annuitant, and his or her spouse and children, in a hospital care plan or medical surgical plan, provided, however, that the board may, in its discretion, terminate the right of assignment. Any such hospital or medical insurance plan may include provision for the beneficiaries thereof who rely on treatment by spiritual means alone through prayer for healing in accordance with the tenets and practice of a well-recognized religious denomination.
     Upon the adoption of a regulation permitting such assignment, the board shall establish and administer a plan for the maintenance of the insurance plan membership by the annuitant or pensioner.