(a) The commissioners court by rule may provide for medical care and hospitalization and may provide for compensation, accident, hospital, and disability insurance for the following persons if their salaries are paid from the funds of the county or funds of a flood control district located entirely in the county, or funds of a hospital district described by Section 281.0475, Health and Safety Code, located entirely in the county, or if they are employees of another governmental entity for which the county is obligated to provide benefits:
(1) deputies, assistants, and other employees of the county, or of the flood control district, or of the hospital district, who work under the commissioners court or its appointees;
(2) county and district officers and their deputies and assistants appointed under Subchapter A, Chapter 151;
(3) employees appointed under Section 76.004(b), Government Code;
(4) any retired person formerly holding any status listed above; and
(5) the dependents of any person listed above.
(b) The commissioners court may contract with a county-operated hospital or a hospital operated jointly by a municipality and county to provide medical care and hospitalization under this section. The commissioners court may, if circumstances warrant, provide for medical care and hospitalization in a private hospital.

(c) A rule adopted under this section relating to a person’s medical care, hospitalization, or insurance coverage must be included in the person’s employment contract.
(d) A rule adopted under this section is subject to the approval of the county auditor.
(e) Before adopting a rule under this section, the commissioners court must give notice of a hearing about the proposed adoption. The notice must be published in a newspaper that is published in the county. The publication must be made at least once a week for two consecutive weeks. The first notice must appear before the 15th day before the date of the hearing. The notice must provide a brief summary of the rule as well as the time and day of the hearing. On adoption, the rule must be entered in the minutes of the hearing and it takes effect on the date set out in the rule. At the hearing, an employee or taxpayer of the county is entitled to appear and protest the adoption of a rule.
(f) A county providing coverage under this section shall reinsure its potential liability or purchase stop-loss coverage for any amount of potential liability that is in excess of 125 percent of projected paid losses and may reinsure its potential liability or purchase stop-loss coverage for any amount of potential liability that is 125 percent or less of projected paid losses. A county must reinsure the liability or purchase stop-loss coverage from an insurance company admitted to do business in this state that has a certificate of authority from the State Board of Insurance.