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Congress extends Cares Act’s FSA relief through 2021

The Consolidated Appropriations Act, 2021 (CAA) brings COVID-19 relief to Americans by continuing many parts of the CARES Act. Those provisions include direct payments to most people, enhanced unemployment benefits, and changes to Health and Dependent FSA carryover and grace period rules.

Section 125 COVID-19 relief: Mid-year election of health benefits and expanded grace period for health and DCAP FSAs.How does FSA relief help in a pandemic?

The COVID-19 pandemic is an era of uncertainty in health care needs. Letting people make a mid-year change to how much they contribute to their Health FSA lets them contribute more to cover higher costs of testing, vaccinations, doctor visits, and over-the-counter supplies and medications, while an enhanced carryover or grace period lessens the risk due to use-it-or-lose-it rules of FSAs.

Applying the same temporary rules to Dependent Care FSAs addresses the changing needs for child care as work hours increase or decrease, and as schools go from virtual to in-person and back again.

What relief is available to FSAs?

Congress has authorized the following FSA relief measures for plan years ending in 2020 and 2021:

Health and Dependent Care FSAs may:

  • Carryover the maximum amount available at the end of one plan year into the next.
  • Allow a grace period of up to 12 months into the new plan year to use up year-end balances.
  • Allow employees who terminate participation during the plan year to continue to spend down the balance to the end of that plan year.
  • Allow prospective election changes to FSA contribution amount for plan years ending in 2021.

Additionally, Dependent Care FSAs may:

  • Temporarily increase the age for a covered dependent from “under 13 years” to “under 14 years.”

Grace period or carryover?

An FSA may allow either a grace period or a carryover amount, but not both.

Does the CAA require employers to do this?

An employer may choose to add any or all of these provisions or none at all.

Do I need a new plan document to make these changes?

A plan document amendment is required, but employers may put these changes into effect immediately and implement that amendment later in the plan year.

Why wait?

Core Documents makes adding a COVID-19 relief plan amendment so easy and affordable, there’s really no reason to wait and risk forgetting about it later in the year.

For only $99, a custom plan document amendment for Health and Dependent Care FSAs can be back to your inbox in less than 1 business day.


core covid 19 plan amendment

Help employees during the COVID-19 emergency by allowing FSA relief through 2021 plan years

$99 one-time fee ordered online

$129 one-time fee ordered via fax or email

As we navigate the COVID-19 pandemic together, employers have asked for relief under current Section 125 cafeteria plan rules that will permit changes to help employees with the changes stay-at-home mandates, school closures, and the disease itself may bring into their lives.

The Core COVID-19 plan amendment makes it simple and affordable for employers to apply the relief available through IRS Notice 2020-29. Adding this amendment to an existing Section 125 plan document means employees can make mid-year elections to FSA contributions that better fit their lives for the duration of the emergency, as well as take advantage of the expanded grace period and carryover provisions that virtually eliminate the use-it-or-lose-it rules for plan years ending in 2021.

And, for the first time ever, Core Documents is offering a plan amendment to employers whose current plan document was made by us and to those who were not.

Just click an ordering option to get started:

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No annual fee — Core Documents does not require an annual renewal fee to maintain your plan document package. A plan document only needs to be updated when there are changes in the plan or in the law that make it necessary. We will notify you when there are sufficient changes in the Code to require amending and restating your Plan and ask that you keep us informed when there is a change to your plan. You can amend and update your plan document anytime, at a discounted fee and only when necessary, which is the most cost-effective way to maintain it.

Fast Service — Most orders placed by 3 PM are returned via email the same day, Monday through Friday. Weekend orders are sent out Monday morning. Plan document packages are processed in the order received. During our busiest months (December, January, and February), the rush order fee (see order form) marks your document to be processed immediately.

Refund Policy: Goods and services provided by Core Documents, Inc. are non-refundable upon receipt. Orders canceled prior to shipping are subject to a fee to cover the cost of goods and services provided during the review, draft, and preparation of your order.


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The Trusted Source of Affordable Benefit Plan Documents for over 20 Years.

Core Documents is the country’s leading provider of cost-effective, tax-saving benefit plan documents for Section 125 Cafeteria plans and Health Reimbursement Arrangements.

The Trusted Source since 1997, thousands of satisfied agents and employer groups nationwide rely upon Core Documents for free plan design consulting services, plan document updates, ERISA Wrap SPDs, and administration services.