(1)    The procedures and provisions pertaining to enrollment, premium transmitted and coverage of eligible employees for income continuation benefits shall be established by contract or rule except as otherwise specifically provided by this chapter.

   (2)   Except as provided in sub. (4), any eligible employee may become covered by income continuation insurance by electing coverage within 30 days of initial eligibility, to be effective as of the first day of the month that first occurs during the 30-day period, or by electing coverage within 60 days of initially becoming eligible for a higher level of employer contribution towards the premium cost to be effective as of the first day of the month following the date of eligibility for teachers employed by the university and effective as of the following April 1 for all other employees. Any employee who does not so elect at one of these times, or who subsequently cancels the insurance, may not thereafter become insured unless the employee furnishes evidence of insurability under the terms of the contract, or as otherwise provided by rule for employees under sub. (3), at the employee’s own expense or obtains coverage subject to contractual waiting periods if contractual waiting periods are provided for by the contract or by rule for employees under sub. (3). An employee who furnishes satisfactory evidence of insurability under the terms of the contract shall become insured as of the first day of the month following the date of approval of evidence. The method to be used shall be determined by the group insurance board under sub. (1).

   (3)   Any employer under s. 40.02 (28), other than the state, may offer to all of its employees an income continuation insurance plan through a program offered by the group insurance board. Notwithstanding sub. (2) and ss. 40.05 (5) and 40.62, the department may by rule establish different eligibility standards or contribution requirements for such employees and employers and may by rule limit the categories of employers which may be included as participating employers under this subchapter.

   (4)   An eligible state employee who elects insurance coverage with a county under s. 978.12 (6) may not elect coverage under this section.

   (5)   If, as a result of employer error, an eligible employee has not filed an application with the department as required under sub. (2) or (3) or made premium contributions as required under s. 40.05 (5) within 60 days after becoming eligible for income continuation insurance coverage, the employee is considered not to be insured for that coverage. The employee may become insured by filing a new application under sub. (2) or (3) within 30 days after the employee receives from the employer written notice of the error. An employee is not required to furnish evidence of insurability to become insured under this subsection. An employee becomes insured under this subsection on the first day of the first month beginning after the date on which the employer receives the employee’s new application under sub. (2) or (3) and upon approval by the department.