Through premium conversion, employees may convert after-tax premium expenses to pre-tax expenses. Premiums sheltered through premium conversion must be for coverage under an employer-sponsored group insurance plan. Premium conversion is sometimes referred to as a non-spending account because the employees' earnings are withheld pre-tax and passed through directly to pay the premiums; employees do not have to file a claim identifying how they "spend" the reimbursed funds.

This same benefit is available with premium reimbursement, however the participant is reimbursed for premiums they paid directly to the provider. This situation arises when the premium if for coverage not provided by the employer. Employees submit a claim with documentation of the coverage and premium amount and are reimbursed.