The common council of a 1st class city may, by ordinance or resolution, provide for, including the payment of premiums of, general hospital, surgical and group insurance for both active and retired city officers and city employees and their respective dependents in private companies, or may, by ordinance or resolution, elect to offer to all of its employees a health care coverage plan through a program offered by the group insurance board under ch. 40. Municipalities which elect to participate under s. 40.51 (7) are subject to the applicable sections of ch. 40 instead of this section. Contracts for insurance under this section may be entered into for active officers and employees separately from contracts for retired officers and employees. Appropriations may be made for the purpose of financing insurance under this section. Moneys accruing to a fund to finance insurance under this section, by investment or otherwise, may not be diverted for any other purpose than those for which the fund was set up or to defray management expenses of the fund or to partially pay premiums to reduce costs to the city or to persons covered by the insurance, or both.