EUROPEAN COMMISSION Brussels, 16.12.2016 SWD(2016) 460 final/2 Corrigendum

Annule e remplace le document SWD(2016) 460 final Part 1/6 du 13 décembre 2016. Erreur cléricale sur la page de couverture. COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT



Initiative to partially revise Regulation (EC) No 883/2004 of the European Parliament and of the Council on the coordination of social security systems and its implementing Regulation (EC) No 987/2009 Accompanying the document Proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 883/2004 on the coordination of social security systems and regulation (EC) No 987/2009 laying down the procedure for implementing Regulation (EC) No 883/2004



(Text with relevance for the EEA and Switzerland) {COM(2016) 815 final}

{SWD(2016) 461 final}



COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT



Initiative to partially revise Regulation (EC) No 883/2004 of the European Parliament and of the Council on the coordination of social security systems and its implementing Regulation (EC) No 987/2009 Accompanying the document Proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 883/2004 on the coordination of social security systems and regulation (EC) No 987/2009 laying down the procedure for implementing Regulation (EC) No 883/2004



(Text with relevance for the EEA and Switzerland) TABLE OF CONTENTS 1.Introduction and background 1.1.EU rules on social security coordination 1.2.Social and economic context 1.3.Policy context 2.OBJECTIVES & SCOPE OF THE INITIATIVE 2.1.Objectives of the review 2.2.Scope of the review 2.3.Methodology used for the purpose of the impact assessment 2.4.Stakeholder feedback 2.5.Definitions 3.Why should the EU act?

4.Long-term care benefits 4.1.Current Coordination Rules for Long-term Care Benefits 4.2.Problems with the coordination of long-term care benefits 4.3.Baseline scenario 4.4.Objectives for coordination of long-term care benefits coordination rules 4.5.What are the various options to achieve the objectives concerning long-term care benefits? 4.6.Stakeholder Support 4.7.What are the Impacts of the Different Options? 5.Unemployment Benefits 5.1.Current Coordination Rules for Unemployment Benefits 5.2.Aggregation of periods for unemployment benefits 5.3.Export of Unemployment Benefits 5.4.The rules on the provision of unemployment benefits for frontier and other cross-border workers 6.Access by econonically inactive mobile citizens to certain social benefits 6.1.Introduction 6.2.Problems with access by economically inactive mobile citizens to certain social benefits 6.3.Baseline Scenario 6.4.Objectives for the review of the rules on access by economically inactive citizens to certain social benefits 6.5.Options for addressing the problems of access by economically inactive mobile citizens and jobseekers to certain social benefits 6.6.Stakeholder support

6.7.What are the impacts of the Different Options 6.8.Conclusions 7.Family Benefits 7.1.Current Coordination Rules for Family Benefits 7.2.Problems with the export of family benefits and drivers behind them 7.3.What are the various options to achieve the objectives concerning export of family benefits 7.4.Stakeholder Support 7.5.What are the Impacts of the Different Options 8.Overall Conclusion 9 HOW WOULD IMPACTS BE MONITORED AND EVALUATED?............171 10. ANNEX I: PROCEDURAL INFORMATION……………………………….178 11. ANNEX II: STAKEHOLDER CONSULTATION…………………………...182 12. ANNEX IIII: WHO IS AFFECTED AND HOW……………………………..202



COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Initiative to partially revise Regulation (EC) No 883/2004 of the European Parliament and of the Council on the coordination of social security systems and its implementing Regulation (EC) No 987/2009 1.Introduction and background 1.1.EU rules on social security coordination

The right of EU citizens to freely move to and live in any EU country, along with their family members, is one of the four fundamental freedoms enshrined in EU law and a cornerstone of EU integration. Free movement would not be possible without the guarantee that citizens do not lose their social security protection when moving to another Member State. A system of social security coordination is essential if freedom of movement is to work in practice. It is for this reason that Article 48 of the Treaty on the Functioning of the European Union (TFEU) has assigned to the legislator the competence to make arrangements to secure the right to benefits and the payment of the benefits to persons resident in another EU Member State. EU rules on social security coordination have existed since the 1950s for this purpose. They may be considered the "oil" that eases the wheels of free movement, facilitating the process of mobility but not compelling or incentivising mobility itself. The essence of social security coordination is about 'linking' a person to a social security system, determining where he or she needs to pay social security contributions and where to claim for social security benefits, if required. It also ensures that previous periods of insurance, work or residence in other countries are taken into account when a person claims benefits. The rules coordinate rather than harmonise: they do not address the national conditions for affiliation or entitlement, nor do they envisage introducing a minimum level of protection, or oblige Member States to introduce new benefits in their social security systems. Member States therefore retain the autonomy to design their social security systems to meet national requirements. There remain significant differences in both the range and level of social protection provided in different EU Member States, which can be a source of political tension and public debate. The coordination rules offer no guarantee that transferring one's residence or professional activities to another Member State is neutral as regards social security. Given the disparities in social security legislation, such transfer may work to one's advantage or not, depending on the circumstances. The rules on the coordination of social security have been adapted several times to ensure that they reflect legal and societal changes in Europe. The current rules, Regulation (EC) No 883/2004 and the Implementing Regulation (EC) No 987/2009, came into force on 1 May 2010 and now apply to both workers (and their family members) and citizens who are, or have been, covered by the social security legislation of a Member State and who are in a cross border situation. EU law, in particular Regulation (EC) No 883/2004, establishes four key principles which subject to limited exceptions must be observed by all national authorities when applying national social security legislation: a)non‐discrimination on grounds of nationality; b)the aggregation of periods of insurance, employment or residence; c)the waiving of residence rules meaning that benefits in cash can be exported to another Member State; and d)the application of a single legislation in terms in respect of liability to contribute and entitlement to benefits. The material scope of the Regulation (EC) No 883/2004 extends to all legislation concerning the following branches of social security: sickness (including long-term care benefits); maternity and equivalent paternity benefits; invalidity pensions; old-age pensions; survivors’ benefits; benefits in respect of accidents at work and occupational diseases; death grants; unemployment benefits; pre-retirement benefits; and family benefits. This list is exhaustive. Consequently, a branch of social security which is not mentioned is in principle outside the scope of the regulation. This is the case, for instance, for housing allowances or social assistance. Over and above these social security benefits, the coordination regulation also applies to special non-contributory cash benefits listed in an annex (Annex X to Regulation (EC) No 883/2004). It should also be noted that since 1 June 2003, citizens from third countries who are legally residing in an EU Member State and whose situation is not confined within a single Member State also have rights under the EU social security coordination rules. 1.2.Social and economic context With 11 million EU citizens of working age (over 14 million for all ages) resident in another Member State, free movement – or the ability to live, work and study anywhere in the Union – is the EU right most cherished by Europeans. The main motivation for EU citizens to make use of free movement is work-related, followed by family reasons. Today, 8.3 million EU citizens of working age are economically active and live in another EU country, representing 3.4% of the total EU labour force. Furthermore, 1.6 million frontier workers and other cross-border workers work in a Member State other than the one in which they reside, and some 1.45 million workers are posted. Third-country nationals who live and work in more than one Member State are also part of the intra-EU mobile labour force and therefore participate to the much needed mobility of workforce across EU countries. 1.2.1 Free movement of workers

Recent trends in free movement of workers Of the 8.3 million active EU movers, around 4.3 million have moved to their current country of residence in 2004 or later ('recent movers'): over one third of these recent movers reside in the United Kingdom and around one fifth in Germany, and other important countries of recent active movers are Spain and Italy. While still significantly below the level of the US, intra-EU labour mobility further increased between 2012 and 2014. Flows from East to West continue to account for the bulk of movements, to a great extent driven by differences in GDP per capita and wages: in 2013, about two-thirds of the intra-EU mobility flows were from Eastern Member States to the West. Labour mobility has attenuated disparities in unemployment, and was reflected in the increasing importance of South to North mobility, from countries more affected by the financial and economic crisis to countries that were less affected: while in 2008 about 8% of the EU mobility flows to the main destination countries originated in the South, by 2013 this doubled to 17%. Spain, Italy, and France, where large numbers of ‘older’ waves of EU movers still reside, have become less important as destination countries. In terms of total inflows, as it has been the case for the past 10 years, the United Kingdom remains the most important destination country, followed by Germany. Figures from 2012 and 2014 confirm a slight decrease in mobility of young people compared to older ones, most likely due to high rates of youth unemployment also in important destination countries due to the economic crisis. Between 2008 and 2012, following the onset of the economic crisis, there has been a large increase in the share of highly educated people moving to another country (among all EU-28/EFTA movers). This share has not increased further between 2012 and 2014. Characteristics of mobile EU citizens Mobile EU citizens are more likely to be of working age (15-64) than nationals of host countries (78.0% vs. 65.7%); those of working age are more likely to be in employment (69.2%) than nationals (65.2%) and third country nationals (53.2%); EU mobile citizens have a significantly higher activity rate than nationals (78.3% versus 72.3%), although in some prominent countries of residence, like Germany, France and Spain, employment among recent mobile EU citizens is lower than among nationals, while in some other prominent destinations like the United Kingdom and Italy the employment rate of recent EU mobile is actually considerably higher than that of nationals. Mobile EU citizens also have a slightly higher unemployment rate (11.7% versus 9.9%), and more recent mobile EU workers even higher: this is likely to be linked to the fact that mobile EU workers, and immigrants in general, tend to be more vulnerable to business-cycle fluctuations than natives, and more recently arrived mobile EU workers more than long-established ones. Cross-border workers In addition to the 8.3 mobile EU workers, who work and live in another country, cross-border (or frontier) workers are EU citizens who live in an EU country and work in another one. In 2014, there were about 1.6 million people who worked in a different EU or EFTA country from the one in which they resided: about 1.2 million worked in another EU country (accounting for 0.6% of the employed EU population), and 382.000 worked in an EFTA country (making up 5.4% of the EFTA employed population). The analysis above has been prepared with reference to data from 2014. As this report had been approved by the Regulatory Scrutiny Board prior to the publication of the Annual Report on Labour Mobility 2016, the authors have not substantially revised the data described above to include the latest statistics available in relation to the reference year 2015. However, it should be noted that in 2015 there was a slight increase in the numbers of working-age EU-28 citizens who are working or seeking work in one of the 28 EU Member States other than their country of citizenship to 8.5 million. This variation is not anticipated to have a material impact upon the analysis contained in this report. 1.3.Policy context Evidence points strongly to the economic benefits of labour mobility: the single market provides broader economic opportunities than the sum of segmented markets, and labour mobility helps correct imbalances between high and low unemployment regions by matching labour supply with demand. This contributes to job creation, promoting economic growth, competitiveness and innovation. Labour mobility also helps to address skills mismatches across borders (skills gaps). This has been particularly important in the context of the current economic and unemployment crisis where some countries are facing higher unemployment (in particular amongst young highly qualified people), while others face a shortage of skilled workers due to demographic trends within their own population. Within the European Monetary Union, mobility may serve to mitigate cyclical adjustment measures in response to asymmetric shocks. Intra-EU labour mobility may have prevented even stronger spikes in unemployment during the crisis, and empirical analysis also suggests that intra-EU labour mobility has played a significant equilibrating role during the crisis notwithstanding the low levels of labour mobility. Available estimates suggest that up to a quarter of the asymmetric labour market shock could be absorbed by migration within a year. Between 2004 and 2009, the GDP of EU-15 has increased by around 1% in the long-run as a result of mobility and even more in major destination countries, such as Ireland, the United Kingdom, Spain or Italy. The effect of mobility since 2004 on the unemployment rate and wages in the destination countries has been estimated to be marginal, at least in the long-run. The impact tends to be short-term, moderate and concentrated on specific groups, in particular the low-skilled workers, whilst it could also lead to reductions in the price of services and to consumer surpluses. Finally, to EU citizens, the wider freedom of movement is the right most closely associated with EU citizenship; 56% of European citizens see it as the most positive achievement of the EU; 67% of EU citizens think that free movement brings economic benefits for their country's economy. Notwithstanding its overall economic benefits, the impact of labour mobility on the ground is subject to debate both in countries of destination and countries of origin. Concerns have been raised, notably in some countries of destination, in relation to potential negative effects of free movement of workers and posting of workers such as the exploitation of mobile EU workerswith adverse effects on local jobs and wages, pressure on local services, socio-economic inclusion, and poverty migration (mobility of unskilled workers who are at risk of losing their job and representing a welfare burden). Also, in spite of evidence to the contrary, concerns have sometimes been raised about the risk of benefit tourism, i.e. the idea that mobility is driven by differences in welfare benefits, or by fraudulent behaviour. Specific concerns have also been raised in some countries of origin, in relation to the adverse long-term effects on economic development and consequences for access to essential services such as healthcare, represented by the sudden outflow of workers, and particularly young workers (youth drain), and highly educated workers (brain drain), including health workers. This is only partially compensated by return migration (which made up 20% of migration flows in 2013) or remittances. A general challenge, as highlighted above, is the fact that these popular concerns are difficult to substantiate with hard facts and data, and often appear to be based on negative perceptions and anecdotal accounts rather than well-founded on evidence. They also do not always acknowledge the distinction between requirements imposed by EU law and the responsibility of Member States to exercise national competencies to enforce the correct application of the rules and invest in detection and prevention of abusive behaviour. Commission President Juncker, in his Political Guidelines, has underlined that "free movement of workers is one of the pillars of the internal market", a fundamental right enshrined in the Treaty. However, at the same time he also underlined that the internal market must be fair and that there is no place for abuse and fraud in the EU. One of the Commission's priorities is work towards a deeper and fairer Internal Market. In the 2015 Work Programme, it has been underlined that "It will be important to support labour mobility, especially in cases of persistent vacancies and skills mismatches, including across borders, while supporting the role of national authorities in fighting abuse or fraudulent claims." A balanced approach to mobility is therefore needed both in order to maximise the benefits, while minimising possible unwanted consequences: measures should be taken to facilitate mobility, but efforts should also focus on supporting national authorities to prevent fraud, abuse and error and renewing efforts to ensure rules are clear, fair and enforceable. The Commission has indicated that it will help public authorities to better implement and enforce existing rules and that it will revise the rules where necessary to adapt them to the economic and social challenges raised by today’s mobility. Achieving a modernised system of social security coordination that responds to the social and economic reality in Member States has been one of the central drivers for the Commission to continue the modernisation process of social security coordination that started more than a decade ago. Achieving greater clarity over the social security coordination system is an important step to face the challenges and controversies that exist over intra-EU mobility and to address demographic challenges ahead of us.

Coherence with other EU policies This initiative may be seen to complement a number of existing, recent and planned initiatives in this policy field including: -Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and of their family members to move and reside freely within the territory of the Member States; -the Communication on Free movement of EU Citizens and their families: five actions to make a difference (COM(2013)837final); -the 2013 citizenship report (COM(2013)269); -the Directive 2014/54/EU on measures facilitating the exercise of rights conferred on workers in the context of freedom of movement for workers; -the proposal (COM/2014/06final) for a regulation on a European network of Employment Services, workers' access to mobility services and the further integration of labour markets, which aims to enhance access of workers to intra-EU labour mobility support services, thus supporting fair mobility and increasing access to employment opportunities throughout the Union; -the Decision (EU) 2016/344 of the European Parliament and of the Council of 9 March 2016 on establishing a European Platform to enhance cooperation in tackling undeclared work , which will bring together different national enforcement authorities of the EU Member States to exchange best practices, develop expertise and analysis and support cross-border operational actions; -the proposal for a Directive of the European Parliament and of the Council (COM(2016) 128 final) amending Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services -The EU policy framework for legal migration, including the EU Blue Card Directive and Single Permit Directive, measures for seasonal workers, intra-corporate transferees, for students and researchers, measures for family reunification and long term residents; -the ongoing work on a comprehensive European Agenda on Migration, which is aimed at building up a coherent and comprehensive approach to reap the benefits and address the challenges deriving from migration, including make Europe an attractive destination for the talent and entrepreneurship of students, researchers and workers; -ongoing work on the European Network of Employment Services strengthening the European job mobility portal (EURES) and the cooperation between employment services; -ongoing work on the Investment Plan for Europe; -The planned Internal Market Strategy for Goods and Services. -Ongoing work to implement the Electronic Exchange of Social Security Information (EESSI): an IT system that will help social security bodies across the EU exchange information more rapidly and securely – as required by Regulation (EC) No 883/2004 and its Implementing Regulation; -The planned initiative for a Fresh Start to address the challenges of work-life balance faced by working families; -The planned review of the disability strategy 2010-2020 assessing progress to ensure the effective implementation of the UN Convention on the Rights of Disabled Persons across the EU. In addition, work on this initiative may be seen in the context of the deepening of EMU, and policies addressing demographic ageing and structural reform in labour markets while promoting a social agenda to support the economic recovery ensuring a Triple A social rating for Europe. Furthermore, work has been conducted with regard to the European Parliament resolution of 16 January 2014 calling for the respect for the fundamental right of free movement in the EU. 2.OBJECTIVES & SCOPE OF THE INITIATIVE

2.1.Objectives of the review The key policy objective of this initiative is to continue the modernisation of the EU Social Security Coordination Rules by further facilitating the exercise of citizens' rights while at the same time ensuring legal clarity, a fair and equitable distribution of the financial burden among the institutions of the Member States involved and administrative simplicity and enforceability of the rules. It does not envisage granting new rights to EU citizens but on the contrary clarifying the current methods of coordination. This initiative serves to facilitate the exercise of the right to free movement by ensuring social security coordination is efficient and effective and does not act as a deterrent to free movement. It is in the interests of all parties to design co-ordination rules that allow full exercise of rights of citizens whilst ensuring coordination requirements for both citizens and Member States are clear and transparent and thereby easy to apply and enforce. It is also important the rules are fair (in particular in relation to the relative balance of responsibility between Member States who receive or have received social security contributions and the obligation to pay benefits) and that perceptions of unfairness are properly investigated and addressed when they arise. Further, the rules should be efficient in terms of cost, administrative burden and risk of fraud or administrative error. Finally the rules should be effective in relation to meeting the overall goals of coordination in particular safeguarding the continuity of social security protection as citizens move from from one Member State to another. This overarching policy objective underpins and informs all elements of this partial review, however, more specific objectives are included in each distinct area under consideration. 2.2.Scope of the review To achieve this overall objective, this impact assessment report considers the impact of possible improvements to the rules in four distinct areas: Long-term care benefits, Unemployment benefits, Access to social benefits for economically inactive mobile EU citizens, Family benefits. These areas have been identified following the Commission's services assessemment of the extent to which the current legal framework still ensures the effective coordination of social security rights. Regulation (EC) No 883/2004 and the Implementing Regulation (EC) No 987/2009 came into force on 1 May 2010. They contain formal review obligations which have obliged the Administrative Commission for Social Security Coordination ('Administrative Commission') and the Commission Services to review and assess the implementation and effectiveness of particular provisions contained within the EU Social Security Rules and obligations undertaken by declaration. In addition to these formal review obligations, the Commission's work has been informed by ongoing dialogue with the Member States within the framework of the Administrative Commission and of course feedback and complaints from citizens, social partners and other stakeholders, which identify on the one hand where the rules are effective and on the other hand where problems arise. In April 2011, one year after the adoption of Regulations (EC) nos 883/2004 and 987/2009, Member States took part in an informal evaluation exercise in Budapest. This discussion concluded that while the rules were functioning well, there were some areas where improvements were necessary, in particular in the field of long-term care benefits, where the lack of a bespoke legislative framework for coordination was causing difficulties in practice. In the field of unemployment benefits, the Council took the decision in December 2011 to review the effect of adding a new provision on unemployment benefits for self-employed frontier workers within a period of two years after its application. At this meeting and at the request of a majority of Member States, the Commission issued a declaration that the review would be an occasion to open up a broader discussion on the current coordination provisions in the field of unemployment benefits and to assess the need for a review of its principles. In addition, in relation to the views of stakeholders, the Commission's work has been informed by reports from expert networks, such as TreSS and FreSsco, in particular the 2013 Think Tank Report Key challenges for the social security regulations in the perspective of 2020. In light of the difficulties relating to long-term care benefits and unemployment benefits (the competence for paying unemployment benefits to frontier workers and export of unemployment benefits), a first analysis already took place in 2013/2014 on the coordination of these benefits. The Impact Assessment Board gave a positive opinion on the Impact Assessment Report on 21 January 2014. In view of the finishing mandate of the Barroso II Commission, the adoption of any legislative measures was not pursued in 2014. Meanwhile, following developments in the Court's case law and in the socio-economic reality the scope of the partial review was expanded to also respond to challenges in the field of family benefits and access of economically inactive EU citizens to social benefits. A Problem Tree showing the inter-relationship between the problems and drivers across the four strands of this revision exercise is set out below together with a option tree summarising the options that have been considered for each strand and how they relate to the general and specific policy objectives. For coherency reasons, the assessment of the '2014' and '2015' policy options has been combined in this Impact Assessment report, with the underlying data for the '2014' analysis updated where appropriate.

Finally, the revision will also include a number of proposals for technical amendments to the coordination rules. The amendments will clarify the rules, but will not substantially revise them and are not subject to a formal Impact Assessment. For further details of these proposals please see Annex XX of this report. Combined problem tree on the partial review of Regulation (EC) No 883/2004 of the European Parliament and of the Council on the Coordination of Social Security Systems and its Implementing Regulation (EC) No 987/2009 2.3.Methodology used for the purpose of the impact assessment For the purpose of this report, each section will summarise the economic, social and regulatory impacts , of each policy option under consideration compared to the baseline scenario. In addition, the analysis assesses other impacts which have been identified as relevant before making an overall assessment of the effectiveness in achieving the specific objectives of the initiative, their efficiency (cost-effectiveness/even burden sharing) and coherence with the general objectives of the EU. In relation to social rights, the impact assessessment primarily examines the impact of an option in relation to clarity, simplification and protection of rights. When assessing possible limitations in the access of mobile EU citizens to certain benefits, the assessment refers to the maximum potential impact, since Member States are always allowed to be more generous than what is prescribed in EU law when granting benefits to mobile EU citizens. The impact on rights recognised under the EU Charter of Fundamental Rights has also been assessed. As regards economic impacts, the report focuses upon the direct costs for Member States for providing social security benefits and the relative distribution financial costs between Member States. In line with the legal basis for the EU Social Security Coordination rules the scope of the initiative is to coordinate not harmonise social security legislation between Member States. Therefore, while the impact of EU measures is assessed, this is distinguished from impact that already stems from differences between Member State social security schemes. This means the options do not assess the payment of 'contributions' by insured persons or employers (levies earmarked for social security purposes) into national social security schemes before the contingency occurs. The impact on taxation is also left aside, as under Regulation (EC) No 883/2004 only contributions are coordinated, while general taxation is not. When assessing the economic impact of possible limitations in the access of mobile EU citizens to certain benefits, the methodology assumes the maximum potential impact were Member States to rely upon derogations which are permitted (but not required) by EU law. In addition, an assessment has been made of the other impacts associated with each option specifically regulatory costs, the impact on the risk of fraud and abuse) and fair burden sharing between Member States. In relation to secondary impacts, some cautious estimates of the impact upon mobility flows have been done on the basis of studies in a selected number of States: however, also in light of the very low numbers of people who would be affected, such secondary impacts are estimated to be marginal. Furthermore the report seeks to examine the overall impact of each option with reference to coherence of each option with the general, specific objectives as set out in section 2.1 and depicted in the option tree on page 12 of this report. Where relevant, this assessment also considers overall coherence with the other EU policy initiatives and objectives referred to in section 1.3 of this report. Each chapter of this report provides a summary and more detailed table of results of the impact of a policy option. The degree to which options are relevant, effective and efficient are indicated on a scale from one to three : ++ for a highly positive assessment, + for a moderate positive assessment, - for a negative assessment. Where a option has both a negative and a postive aspect, a +/- is indicated, highlighting the mixed impact. The sign 0 is used to indicate that the option is considered to be neutral in comparison to the baseline scenario. The combined effect of this analysis has been used to make an assessment of overall effectiveness and overall efficiency. Effectiveness has been measured by a qualitive assessment of the effectiveness of an option in achieving the the general and specific objectives and its score in respect of the social, economic and other impacts referred to above. By contrast overall efficiency has been assessed by reference to the overall effectiveness of each option compared to its financial impact (economic and regulatory costs). The rationale used to underpin these overall assessments is explained in the conclusions to each section of the report. No impact on the competitiveness of specific sectors is foreseen by any of the options, as the subject matter does not concern commercial activities of enterprises. The coordination rules are directly addressed to Member States and their institutions and only concern the services provided under the public social security system. Small and medium size enterprises (SMEs) are not directly affected. They will provide their services under the conditions set by the national legislation. In the public online consultation, private organisations and public and private employers had the opportunity to react. Whilst it is true that mobility in itself entails movements between Member States and that these movements are accompanied by vehicle emissions, no significant environmental impact is expected from the options under consideration because of the marginal secondary impacts on mobility in comparison to general mobility flows. Several studies, using different analytical models and methodologies, have been used to prepare the impact assessments. In general, the studies rely on a combination of data sourced through EU-wide surveys such as the Labour Force Survey or data published by Eurostat. This has been complimented by data collected from national competent authorities within the framework of the Administrative Commission, in particular with reference to the payment of social security benefits within the framework of the EU Social Security Rules or the issuance of portable documents attesting to rights acquired under the Regulations on the basis of the sources identified in Annex IV. Since options on the coordination of long-term care benefits, coordination of unemployment benefits for frontier workers and export of unemployment benefits had been assessed in 2013-2014, an update with more recent and newly available data has been conducted in 2015.

It should be noted that some statistical analysis is based on citizenship (Labour force survey) and therefore identify EU mobile citizens/workers (those living/working in another country than their country of citizenship) – while other data (administrative data collection) are based on headcounts of case where citizenship is not collected and that therefore constitutes a broader definition of mobility, i.e. includes not only EU mobile citizens/workers but also nationals returning to their country of citizenship as well as third-country nationals moving between EU Member States. In light of this, the Impact assessment adopts a broad definition of mobility which takes into account that in addition to EU mobile citizens other groups also benefit from coordination. In addition, as there is no precise statistical data on the number of frontier workers within the legal meaning of the coordination Regulations, it has been assumed for statistical purposes that all cross-border workers residing in a neighbouring country are frontier workers. Since quantitative analyses have been mainly based on administrative data provided by Member States, it has to be underlined that not all Member States were able to provide data on the different benefits, nor was all data complete. When reliable quantitative information on the total impact of the proposed initiative was not available, the analysis has been based on a qualitative assessment and structured interviews conducted with officials in representative Member States. Any limitations to this data are highlighted in the relevant chapter. An overview of the analytical models used for the impact assessment is provided in Annex IV. 2.4.Stakeholder feedback As the preparatory work for the "Revision of Regulation (EC) No 883/2004 and Regulation (EC) No 987/2010" began in 2009, stakeholders were consulted on several occasions on the different elements which were considered in the impact assessment: 1.Member States were consulted on coordination of long-term care benefits, export of unemployment benefits, aggregation of unemployment benefits, coordination of unemployment benefits for frontier workers, export of family benefits and access to special non-contributory cash benefits for economically inactive persons, within the framework of the Administrative Commission. 2.National administrations were also consulted via a specialised online survey on the coordination of long-term care benefits, export of unemployment benefits and coordination of unemployment benefits for frontier workers 3.Social partners were consulted on the coordination of long-term care benefits, coordination of unemployment benefits for frontier workers and export of unemployment benefits in the framework of the Advisory Committee for the Coordination of Social Security Systems, and on the coordination of family benefits, long-term care benefits, and unemployment benefits during a dedicated hearing. 4.NGOs were consulted on the coordination of family benefits, long-term care benefits, and unemployment benefits during an ad-hoc consultation workshop. 5.Two online consultations were also launched, one on the coordination of long-term care benefits, export of unemployment benefits and coordination of unemployment benefits for frontier workers which took place between December 2012 and February 2013; the other one on the coordination of unemployment benefits and the coordination of family benefits which took place between July and October 2015. It has to be noted that the different consultations presented different degrees of specifity in relation to the options assessed, and due to the high level of complexity of some topics, and the late definition of some options, some consultations have been kept very wide (e.g. the public consultation on aggregation of unemployment benefits; export of family benefits and social security coordination rules on the posting of employed and self-employed persons). The views of different stakeholders are presented in the assessment of each option, a more detailed description of the consultation process is included in Annex II. 2.5.Definitions Throughout the report, reference is made to the “competent Member State”, “Member State of residence”, "Member State of last activity", “insured persons”, “frontier workers”, “cross-border workers”, "mobile EU workers" meaning the following within the framework of Regulation (EC) No 883/2004: "Member State" – Regulations (EC) Nos 883/2004 and 987/2009 apply to all countries within the EEA and Switzerland. Within this report, the term "Member State" is sometimes used to refer not only apply to EU-28 States but also Iceland, Liechtenstein, Norway and Switzerland. “competent Member State”: Member State in which the institution with which the person is insured is located, or the institution paying the social security benefit; “Member State of residence”: Member State where the institution which is competent to provide benefits in the place where the person resides is located; "Member State of last activity": Member State where an unemployed person was most recently working before becoming unemployed

“insured person” any person satisfying the national legal conditions to have the right to benefits, taking into account the provisions of this Regulation; “cross-border worker”: a person who resides in another Member State than the State of activity as an employed or self-employed person. This can be divided into two subsets: (i) “frontier worker”: any person pursuing an activity as an employed or self-employed person in a Member State and who resides in another Member State to which he/she returns as a rule on a daily or weekly basis. These States need not be neighbouring countries. A person working in Finland who returns every week on Friday evening to his/her home in Portugal is a frontier worker. Distance is irrelevant; (ii)“other cross-border worker”: a cross-border worker who is not a frontier worker in the legal sense because he/she does not return to the Member State of residence on a daily or weekly basis; "Mobile EU worker": a worker who has moved his work or place of residence to another Member State.” 3.Why should the EU act? Social security coordination concerns cross-border situations where no Member State can act alone. Coordination measures at EU level in the field of social security are required by Article 48 TFEU and necessary to guarantee that the right to free movement can be exercised. Without such coordination, free movement may be hindered, since people would be less likely to move if it meant losing social security rights acquired in another Member State. The EU coordinating legislation replaces the numerous pre-existing bilateral agreements. The creation of an EU framework in this field ensures a uniform interpretation and protection of rights of mobile EU citizens and their family members that could not be achieved by the Member States alone at national level since this could potentially conflict with the Regulations. This not only simplifies social security coordination for Member States, but also ensures equal treatment of EU citizens who are insured in accordance with national social security legislation.An effective and efficient coordination system at EU level requires that it takes account of changes in Member States' national social security legislation and keeps track with changes in social reality that affect the coordination of social security systems to achieve a fair and just distribution of financial burden between Member States. Taking action at EU level aims to ensure a uniform interpretation and creates a common basis that applies to all Member States. Conversely, without such an update of the Regulations the financial and administrative burdens would be likely to be greater, as the provisions would not meet changing needs of the Member States. 4.Long-term care benefits 4.1.Current Coordination Rules for Long-term Care Benefits According to the OECD definition, long-term care benefits are a holistic type of benefits that bring together a range of services for persons who are dependent on help with basic activities of daily living over an extended period of time. Such benefits can be provided in kind or in cash. Examples include allowances (of a fixed or differential amount) to compensate for the additional expenditure resulting from the recipients’ condition of reliance on care (cash benefits) or the provision, direct payment or reimbursement of the costs of home care services, specialised home adaptations or equipment (benefits in kind). Under the EU coordination rules, long-term care benefits are mentioned by Regulation (EC) No 883/2004 at several occasions. However, these benefits have so far not been expressly defined, nor coordinated within the scope of Regulation (EC) No 883/2004 (leaving aside the clarification in Art. 1 (va) that also long-term care benefits in kind have to be regarded as benefits in kind for the application of the sickness chapter). The Court of Justice considered that long-term care benefits for the purposes of Regulation (EC) No 883/2004 are benefits intended to improve the state of health and quality of life of persons reliant on care and as such, are intended to supplement sickness insurance benefits (irrespective of classification under national law). If these benefits are granted on the basis of an objective and legally defined position (i.e. in a non-discretionary way), they are covered by the Regulation. As a rule, long-term care benefits are designed to promote the independence of persons reliant on care, in particular from the financial point of view. Typically, they promote home care in preference to care provided in hospital but also consist of grants, aids or subsidies for people staying in residential care facilities. The conditions for the grant of the benefit or the underlying method of financing do not affect the classification of a benefit. The fact that a benefit is non-contributory or that its grant is not linked to payment of a sickness insurance benefit, is according to the Court, of irrelevant to its classification as a long-term care benefit. In the absence of a comprehensive and coherent coordination regime well suited to the particularities of long-term care benefits, the Court has consequently decided that long-term care benefits should be coordinated in line with the coordination rules applicable to sickness benefits. According to these rules, long-term care benefits in kind are to be provided by the Member State of residence and reimbursed by the competent Member State. Long-term care benefits in cash are to be provided and paid by the competent Member State, including export to entitled persons residing in another Member State. Residence for social security purposes, according coordination Regulations, means the place where the person habitually resides. Competence of a Member State is established according to the conflict rules laid down in these Regulations. In line with these rules, the Member State where a person works is responsible for sickness benefits even if the person resides in another Member State. For pensioners, it is the State primarily responsible for their pension that is competent for sickness benefits, even if they reside in another Member State. Family members of these categories of persons are also covered by the said rules. Regulation (EC) No 883/2004 also contains an anti-overlapping provision which applies in situations where a person receives long-term care benefits in kind from the State of residence and long-term care benefits in cash from competent Member State and both benefits are intended for the same purpose. The benefits in cash have priority over the benefits in kind and the competent Member State will deduct from the benefits in cash the amount for which it reimburses the State of residence for the long-term care benefits in kind. 4.2.Problems with the coordination of long-term care benefits

Lack of clarity for citizens and institutions There is a low level of understanding of the coordination rules for the recipients of long term care benefits leading to confusion for both citizens and competent institutions. Slightly more than 80% of the individual respondents to the EU Public Consultation claimed either not to know (44%) or to have only a vague idea (38%) about the current rules on care benefits for elderly and/or disabled persons when moving within the EU. These figures contrast with the 18% of individuals who claimed to know the current rules. In addition, almost 57% of the participants declared that they did not know in which country they could apply for long-term care benefits if they or their family members would be in need of them. 16% of the individuals were not even aware of the possibility to apply for long-term care benefits while living outside the Member State in which one is insured. Moreover, 24% of the respondents replying on behalf of organisations (national administrations, social partners and trade unions, civil society and NGOs and private companies) were of the view that intra-EU migrants are not sufficiently aware of their rights. A driver behind this problem is a lack of common definition or criteria to identify long-term care benefits as a relatively new strand of social security rights. During the final years of the twentieth century Member States have invested in the design of special schemes for persons in need of care. The main purpose of these new schemes was to help the ageing population for which traditional assistance from other family members was no longer readily available. An additional driver is that at the national level, long-term care benefits are very diverse, either based on insurance legislation (Belgium, France, Austria, Germany, the Netherlands, Luxembourg, Spain, Portugal, Italy, Greece) or on residence legislation (Sweden, Denmark, Finland, United Kingdom, Ireland), some being universal (Nordic countries, the United Kingdom), while others are not (Estonia, Latvia, Lithuania, Poland, Czech Republic, Hungary, Slovakia, Romania, Bulgaria, Croatia) . Benefits having characteristics of the long-term care benefits can be divided over several branches of social security in some Member States, whereas in others separate legislation specific to long-term care exists. This may lead to difficulties when more than one country is involved. This lack of clarity has direct consequences for EU citizens who have or wish to exercise their right to free movement, especially those who are vulnerable in light of their need for long-term care. Lack of clarity in legal framework for long-term care benefits While it is clear that sickness benefits are traditionally intended to improve the state of health and invalidity schemes are traditionally intended to compensate for the loss of income due to invalidity, there is not one and the same principle that applies to long-term care benefits. Although coordinated as sickness benefits, long-term care benefits still have a number of distinctive features which differentiate them from traditional sickness benefits. In particular, they are typically awarded for a longer period of time than sickness benefits and may also have the purpose of compensating for loss of income or other social risks faced by the claimant. This leads to lack of a common understanding at EU level of what long-term care benefits are and how they should be coordinated, which can lead to different outcomes for citizens and competent institutions. In the past three years (mid-2012 – mid-2015), the Commission services received around 450 complaints or queries related to problems linked to coordination of sickness and long-term care benefits. This shows that the current ad-hoc system of coordination is an ongoing source of uncertainty. Drivers behind this problem may be identified as the lack of a common definition or common criteria to identify long-term care benefits, which, when recognizing the wide variety of different models of long-term care provision between the Member States, results in a disparate approach. Not all the benefits that correspond to the identified common characteristics at EU level are recognised as long-term care benefits by the Member States. For instance, Greece, Italy, Portugal, Romania and Slovakia have indicated that they do not have any long-term care benefits which fall in the scope of Regulation (EC) No 883/2004, while information available shows that such benefits exist in these countries. Also, Member States apply differing definitions in their national legislation, if they have a definition at all. Bulgaria, Greece, Malta, Norway, Romania, Slovakia and the United Kingdom do not have in their national law a definition of long-term care benefits. This does not mean that no long-term care benefits exist, but that the benefits might be related to other social insurance risks, such as invalidity or old age. A further driver may be regarded as the "ad-hoc" system of coordination of long-term care benefits, which is not always applied consistently either by national authorities or the Court. In its recent case-law , the Court acknowledged that long-term care benefits may have characteristics of invalidity benefits and old-age pensions. The Court may continue connecting long-term care benefits to other social security risks than sickness, depending on the individual characteristics of the benefits. Such an ad-hoc coordination system contributes to legal uncertainty, inconsistent approaches by national institutions and unpredictable outcomes for citizens. In a survey of stakeholders, the lack of a uniform application and understanding of EU law by Member States and the lack of awareness among mobile citizens were identified as significant problems . The authorities confirmed that poor coordination and disputes follow from the lack of consensus concerning the treatment of long-term care benefits across the Member States. The general view shared by these authorities is that the system is unclear, administratively burdensome and unstable. The lack of legal clarity over classification of these benefits and their coordination increases the likelihood of infringement proceedings and leaves it up to the Court to decide on a case-by-case, and fragmented, basis which national benefits are to be considered a long-term care benefit. Moreover, the Court only has the option of applying the existing coordination principles when categorising new benefits and thus categorising them with the benefits which they seem to resemble most closely. In these circumstances, the Court has determined in its case law a distinction between long-term care benefits in cash and sickness benefits within the strict sense . It is likely that the Court will continue its reasoning on that basis, and by connecting the long-term care benefits to other social security risks on a case-by-case basis, which will not be helpful to come to a common understanding of long-term care benefits. This can have a number of adverse consequences for the potential users of these benefits. For example, there may be difficulties in applying some of the traditional coordination mechanisms, such as the aggregation of periods , the prevention of overlapping , the priority rules in case there is a concurrent right from two Member States or the rules to provide supplements if a person would have been entitled to a higher benefit from the State of insurance. While successful infringement procedures may lead to a change in the legislation or national general practices, such successes are on a case by case basis and the advantages for individual citizens are limited, as the specific effects for them have to be established by national courts. Furthermore, infringement procedures may take a long time. In case of non-compliance, the case will be referred to the Court and the rights of EU citizens will still be on hold. Possibility of losing benefits, or double payments There is a risk that a person may lose out on long-term care benefits if they are not properly classified and coordinated. Another, more far-reaching situation is the one in which a person receives neither benefits in cash or kind, as he or she moved from a State that only has benefits in kind (= non exportable), to a State which only has benefits in cash to the detriment of the fundamental rights of the person concerned. As with the problem above, the drivers behind this problem are the lack of a common definition or common criteria to identify long-term care benefits, which when recognizing the wide variety of different models of long-term care provision between the Member States results in a disparate approach. To distinguish between the benefits in kind and in cash, the Administrative Commission prepared a simple 'yes/no' list without any further description of these benefits . In such a list for long-term care benefits, 11 Member States have declared that they do not have cash benefits. Another 10 Member States have said that they do not have benefits in kind. These declarations appear inconsistent with the Commission's own research. The current "yes/no" list for long-term care benefits has proved to be inadequate. The user percentage of long-term care benefits in cash is only equal to zero in Belgium, Bulgaria, Ireland, Hungary and the Netherlands . Also, all Member States have benefits in kind and in cash that can qualify as 'long-term care benefits' . Solely listing benefits by means of a yes/no list may have the consequence that a mobile citizen may either lose rights or alternatively lead to a duplication of rights leading to inefficient allocation of welfare budgets between Member States. The current anti-overlapping provision in Regulation (EC) No 883/2004 deals with the situation where a person receives long-term care benefits in kind from the State of residence and long-term care benefits in cash from competent Member State and both benefits are 'intended for the same purpose'. However, the current system makes it difficult for Member States to be clear over whether two benefits are ‘provided for the same purpose’. In particular, a competent Member State providing long-term care benefits in cash is unable to verify whether or not the person in receipt of sickness benefits in kind from the State of residence for the same purpose and the same time period; this would only reveal itself when the competent Member States receives a claim for reimbursement from the Member State of residence which normally happens only annually. In cases of overlap, the competent Member State is effectively taking on extra information obligations to process claims for something that a person is already receiving.

Example illustrating the risk of double payments: an Austrian pensioner with long-term care needs moves to Germany after his retirement. He receives a full Austrian pension (and has no pension entitlement from Germany or any other Member State). In accordance with the rules of Regulation (EC) No 883/2004, Austria is the 'competent Member State' for providing long-term care benefits in cash. Consequently, Austria has to export care allowances in cash, for example, a cash benefit intended to cover the costs of a home carer. The German system also provides care benefits in kind which can be claimed by the pensioner, such as trained carers who visit elderly persons to provide assistance their home. Austria will reimburse the costs for the benefits in kind provided by Germany. The Austrian care allowance might no longer be necessary as the person already receives home care in Germany. It is therefore necessary for the Member State to compare, in line with the anti-overlapping rule, the two benefits to determine if they are intended for the same purpose and are paid for the same period of time in order to prevent double-payments. For instance, in 2012, 2570 persons exported Pflegegeld from Austria to another Member State (Table 75 in Annex V), of which 70% of this long-term care benefit in cash was exported to Germany. This is an important share, which makes the comparison with the benefits in kind in Germany even more relevant. It is noticed that the existing anti-accumulation rules at Article 34 are not working effectively in this regard. 4.3.Baseline scenario In total, there are 1.8 million persons covered by the Regulation who live in another Member State than the one in which they are insured against sickness. Out of them, 45.000 mobile citizens use long-term care benefits in kind and 35.000 mobile citizens use cash long-term care benefits . The demographic changes in the EU (ageing population) and national legislative developments (new types of benefits) are drivers for Member States to continue developing special schemes for persons in need of care. On the basis of the demographic projections , the effect of ageing itself is expected to result in an increase of need for long-term care and of public spending on long-term care benefits from 1.6% of GDP in 2013 to 1.8 % of GDP in 2020 and 2.0% of GDP in 2030. The budgetary impact of the baseline scenario in 2013 is of 792.796.846 EUR . The differences in the concept of long-term care benefits and their treatment across Member States can undermine the effective functioning of the reimbursement and mechanism of deduction for the avoidance of double payments. In order to avoid the competent Member State reimbursing costs for benefits in kind that overlap with the benefits in cash that it provides directly to the person concerned, it is necessary to have a clear overview of benefits that are provided for the same purpose.The number of cross-border users of long-term care benefits, who are today 80.000 (45.000 receiving long-term care benefits in kind and 35.000 long-term care in cash ) might increase by 11% in 2020 in comparison to 2013and by 28% in 2030 . A lack of clear classification also limits the efficiency gains that might otherwise be foreseen by the launch of the Electronic Exchange for Social Security Information (EESSI) scheduled for launch by the end of 2016 with a deadline for full implementation in all Member State by the end of 2018 which will introduce common structured electronic documents and a uniform procedure for all national authorities to follow when processing claims social security benefits. In the absence of clear classification, EESSI will have limited potential to support national institutions to process long-term care benefits in a consistent and efficient manner. Furthermore, non-action increases the risk of loss of confidence in the EU rules for citizens and institutions. Keeping the current framework can also have knock-on effects on the administrative costs for the Member States. Finally, it might also imply costs for citizens seeking to enforce their rights in a legally uncertain environment. 4.4.Objectives for coordination of long-term care benefits coordination rules As with all elements of this review exercise, the general policy objective of this initiative is to continue the modernisation of the EU Social Security Coordination Rules by further facilitating the exercise of citizens' rights while at the same time ensuring legal clarity, a fair and equitable distribution of the financial burden among the institutions of the Member States involved and administrative simplicity and enforceability of the rules. In relation to long-term care in particular, this is reflected in the need to ensure coherence and clarity in the rules applied to long-term care benefits and lay down a stable coordination system, while recognising that the current inconsistent approach by Member States creates legal uncertainty for citizens and national institutions and consequent difficulties in uniform application of these rules. In addition to the general objective, the specific objectives in the field of long-term care benefits are: To establish a stable regime appropriate to long-term care benefits which prevents loss of benefits and lays a basis for effective and efficient coordination;  To ensure a fair and equitable sharing of the financial burden between Member States: to prevent double payment of sickness benefits in cash and ensure that the financial burden for paying long-term care benefits to persons who are insured in the competent Member State are shared proportionally between that Member State and the State of residence. To bring legal clarity and transparency for citizens, institutions and other stakeholders on coordination rules applicable to them so that they are ensured what the citizens’ rights to long-term care are when exercising their right to freedom of movement. 4.5.What are the various options to achieve the objectives concerning long-term care benefits? A number of policy options have been identified to meet the objectives set out in Section 1.4.

4.5.1 Option 0: Baseline scenario No explicit legal framework is laid down in the coordination Regulations for long-term care. Following the interpretation given by the Court, the existing rules on sickness benefits apply to long-term care benefits. The Member States in their national legislations, or in case of disagreements, the Court, decide on a case-by-case basis which national benefits are to be considered as long-term care benefits. 4.5.2 Option 1: The competent Member State provides long-term care benefits in cash and reimburses the cost of benefits in kind provided by the Member State of residence This option applies the existing rules on sickness benefits to long-term care benefits and complements them with some specific rules that take account of the characteristics of long-term care benefits. Similarly to sickness benefits, long-term care benefits in kind are to be provided by the Member State of residence in accordance with its legislation and reimbursed in full by the competent Member State. This can be done at the actual or at fixed level of expenses, depending on the national system, as shown in the accounts of the Member State of residence. Long-term care benefits in cash are to be provided and paid by the competent Member State in accordance with its legislation, including to the entitled persons residing in another Member State. By agreement between the Member States, benefits in cash may, however, be provided by the Member State of residence at the expense of the competent State and in accordance with the legislation of the latter. The following clarifications distinguishing the long-term care area from the sickness rules on coordination are also proposed: 1) Inserting a new definition of long-term care benefits in Article 1 of Regulation (EC) No 883/2004 that takes into account the characteristics of long-term care benefits and facilitates their distinction from sickness benefits in a strict sense. Specifically, this could be accomplished by introducing a new chapter in the Regulation for long-term care benefits, based on the same principles as the sickness chapter but allowing for the key distinctions between these two types of benefits. 2) Defining the risk of 'long-term care' in Article 3(1) of Regulation (EC) No 883/2004 so it clearly falls as a distinct field of social security falling within the material scope of the EU rules; 3) Drawing up a list of long-term care benefits per Member State that covers all benefits that are included or excluded for the purposes preventing double payment of long-term care benefits by the institutions. This should be possible on the basis of the common elements in the definition and the existing analysis of national systems. 4.5.3 Option 2: The Member State of residence provides all long-term care benefits with reimbursement by the competent Member State Under this option the State of residence grants long-term care benefits in cash and in kind as they exist under its national system. This is different from the baseline scenario, under which the competent Member State pays the long-term care cash benefits directly to the insured person. By making only one Member State responsible for providing long-term care benefits in cash and in kind, the risk of overlapping or a total loss of benefits in kind is reduced. Similarly to sickness benefits, the competent Member State shall reimburse expenses for long-term care benefits in kind. This can be done at the actual or at fixed level of expenses, depending on the national system, as shown in the accounts of the Member State of residence. An additional reimbursement procedure for long-term care benefits in cash would however need to be introduced between the Member States. The situation can occur where the level of the long-term care benefits in the State of residence is lower than in the competent Member State. The two sub-options described below explore the possibilities for offering more favourable treatment of the persons concerned, in particular by giving the best benefits from two countries. The sub-options are partly inspired by the coordination system that applies to family benefits in Regulation (EC) No 883/2004. In the field of family benefits, if two rights coincide, the person is entitled to the highest amount that he/she is entitled to under either of the two systems (for more information see Chapter 7.1 ). 4.5.3.1. Sub-option 2a) The benefits are provided at the level of the Member State of residence without a supplement by the competent Member State Under this sub-option, all long-term care benefits are provided by the Member State of residence at the level as determined by its legislation, irrespective of where the person is insured. The person concerned will not receive a 'top-up' from the competent Member State; even its benefits are higher than those in the Member State of residence. 4.5.3.2. Sub-option 2b) The benefits at the level of the Member State of residence are supplemented by the competent Member State Under sub-option 2b, the person receives a supplement from the competent Member State in the event that the benefits in the Member State of residence, or the amount of reimbursement, are at a lower level than in the competent Member State. The 'top up' will be paid to the amount to which the person would have been entitled in the competent Member State and will be paid directly to the person concerned.

A person is insured in Member State A and resides in Member State B, where he applies for home care. The home care services costs EUR 5.100 including a service user charge of EUR 1.100 paid for by the insured person. The amount corresponding to the level of cover provided by the insurance system of Member State B is EUR 4.000. This amount is paid by the institution of Member State B and is to be refunded by the institution of Member State A. But if the level of cover under the system of Member State A is higher, e.g. EUR 6.000, the person will also be able to receive the actual costs incurred in terms of the service user charge of EUR 1.100 from Member State A. 4.5.4 Discarded options Three options were considered but discarded from assessment: a) The introduction of a safeguarding provision The competent Member State would award the long-term care benefits in cash for persons who reside outside that Member State. In a situation where the legislation of the competent Member States does not provide for long-term care benefits in cash and at the same time benefits in kind are non-existent in the Member State of residence, the Member State of residence should grant the long-term care benefits in cash existing under its legislation to avoid that a person is left with nothing. The competent Member State would then reimburse the benefits in cash provided by the Member State of residence. This option would be less clear than the baseline scenario and would give rise to a lot of uncertainties for the Member State of residence about when benefits are or are not available in the competent Member State . Although the right to a benefit for the person concerned would be guaranteed, this option does not provide legal certainty about when the Member State of residence would provide benefits, what benefits would be concerned and what amount. b) Make the Member State of residence responsible for providing all long-term care benefits without reimbursement by the competent Member State The Member State of residence would be competent for providing all the long-term care benefits, in cash and in kind, on the basis of its own legislation, thereby applying its own conditions for entitlement and granting benefits at the level set in that Member State. The long-term care benefits would remain fully at the expense of the Member State of residence. Only one Member State is involved in providing long-term care benefits and this will make the system administratively easier to handle. However, the Member State of residence will be faced with an increase in applications for long-term care benefits, both from persons who are not insured against sickness benefits in that Member State and who have not contributed to financing the system of long-term care benefits (e.g. pensioners who are covered for health care in the country from which they receive a pension) without recourse to any reimbursement. Moreover, the system could provide an incentive to move to a country with more 'generous' long-term care benefits. This option would therefore put too great a burden on the administrative and financial organisation of the system of long-term care benefits in the Member State of residence. c) Make the competent Member State responsible for providing all long-term care benefits to insured persons residing abroad (export). Under this option the competent Member State would become responsible for providing all long-term care benefits to insured persons who are residing abroad. Where benefits are only available in the form of services, the competent Member State would reimburse the relevant services provided for in the Member State of residence according to the rates applicable in the Member State of residence. This option would introduce a slight improvement in the protection of rights of the person concerned, as all persons in need of long-term care will be treated equally in the competent Member State (=Member State of insurance) and will not have their benefits reduced when they move to another Member State. However, this option would have significant practical challenges, including the necessity of increased information exchange between Member States. The benefits in kind available in both countries would need to be compared to assess if the benefits in kind in the Member State of residence could be provided under the same conditions as the competent Member State. If no benefits in kind are available in the Member State of residence the competent Member State would have to 'value' these benefits in cash. In all, this option would not contribute to an even financial burden sharing between Member States, and would make the system harder to administer for the competent Member State. 4.6.Stakeholder Support 4.6.1 Baseline Scenario In discussions in the Administrative Commission, the baseline scenario received support from 10 delegations ; two delegations explicitly opposed the option . In the stakeholders’ EU public consultation this option received support corresponding to replies from 18% of individuals, 17% of social partners and 12% of NGOs. 4.6.2 Option 1: The competent Member State provides long-term care benefits in cash and reimburses the cost of benefits in kind provided by the Member State of residence Option 1 gained the most support from the delegations in the Administrative Commission, whereby 12 delegations explicitly supported this option, seven other Member States did not object its elements without taking definite position and none of the Member States declared to be against . Although the opinions differed as regards their exact design, all delegations recognised the importance and the need to have a definition and a list of long-term care benefits. The outcome of the public consultation provided for the same result as the baseline scenario as the consultation did not make distinction between it and option 1. 4.6.3 Option 2: The Member State of residence provides all long-term care benefits with reimbursement by the competent Member State Option 2 did not receive explicit support from any delegation in the Administrative Commission, four Member States being against. The complexity and the administrative burden of supplement system is generally the main reason for the low support for this option among national public authorities. One of the comments was that when the system of providing long-term care benefits is decentralised and local municipalities are responsible for providing long-term care benefits, this option will be difficult to implement. In the stakeholders’ consultation option 2a) received support corresponding to replies from 19% of individuals, 17% of social partners and 50% of NGOs, while option 2b) was supported by 6% of individuals, 25% of social partners and none of the NGOs. 4.6.4 Discarded options

Although delegations in the Administrative Commission were not explicitly consulted on the discarded options, the discussion was not limited to the selected options and possibility was given to present any additional ideas. None of the delegations supported any of the discarded options. In the public consultation, option a) received support from 14% of individuals, 8% of social partners and 12% of NGOs, option b) was supported by 19% of individuals, 17% of social partners and 50% of NGOs and option c) received support from 38% of individuals, 33% of social partners and 25% of NGOs. 4.7.What are the Impacts of the Different Options? For all of the options assessed, the potentially affected groups are the same. The options are specifically targeted at cross-border workers, retired former cross-border workers, other mobile pensioners and the family members of the said categories of entitled persons. The fact there is no specific coordination regime and a common definition, made it difficult to collect data on long-term care benefits as limited data exists at national level. Administrative data on long-term care benefits are only available in specific forms dealing with the coordination rules of the sickness chapter. For the purposes of assessing the impact, two types of data sources were used: secondary data (available literature and reports at EU and Member States’ level, particularly the trESS network reports; replies to the online public EU Consultation on the need to revise of the current rules; available statistical data with regard to mobility patterns and the use of long-term care benefits in cross-border cases) and primary data, collected through interviews and a consultation of the stakeholders (findings from strategic interviews with Commission officials; findings from interviews with stakeholders at EU level, e.g. European umbrella organisations; findings form interviews with key stakeholders at national level (health insurers, healthcare providers); replies to the EU-wide web-based survey among responsible public authorities; new, generated statistical data with regard to mobility patterns and the use of long-term care benefits in cross-border cases; findings from the 13 workshops/group interviews and 8 phone interviews on the administrative costs and administrative burden related to the policy options). For further information about the methodology see section 2.3 and Annex IV. The Table below illustrates a summary of impacts of the different options: Type of impact Clarification Simplification Protection of rights Fundamental rights Economic impacts Regulatory costs Risk of fraud and abuse Equitable burden sharing Member State Coherence with EU objectives Overall Effectiveness Overall Efficiency (cost vs effectiveness) Baseline Scenario 0 0 0 0 0 0 0 0 0 0 0 Option 1 ++ + + + 0 0 + 0 + ++ + Option 2a ++ + +/- +/- + - - +/- + + + Option 2b + -- ++ + -- -- - +/- + - - The following Tables demonstrate specific impacts for each of the considered policy options: Policy Option 1: The competent Member State provides long-term care benefits in cash and reimburses the cost of benefits in kind provided by the Member State of residence Social impacts Clarification ++ This option will coordinate long-term care benefits under a separate umbrella, taking into account their specific characteristics. The creation of a common EU definition of long-term care benefits and a concrete list of the benefits is an important step towards more clarity and a uniform approach will lead to greater clarity and a uniform approach, while preserving the method currently applied to sickness benefits. Simplification + This option will not fundamentally change the principles of the baseline as regards the differences between benefits in kind and in cash. However, the proposed option will make it easier for Member States and citizens to understand and apply the coordination provisions on national long-term care benefits. The option also offers a greater stability as it maintains the main principles currently applied under the baseline scenario. Protection of rights + This option will contribute to expediting the process by which persons that require care receive the benefits by removing much of the uncertainty over the status of the various long-term care benefits. There will be no doubt about which benefits can be claimed in a cross-border situation. Nevertheless, the actual receipt of the benefits remains dependent on the distinction between benefits in cash and in kind and the limitation that benefits in kind cannot be exported. Theoretically, an insured person could still be excluded from their benefits, for example, when the competent Member State only grants long-term care benefits in kind and the State of residence only has benefits in cash. Financial impact 0 This option would involve no economic impact in comparison to the baseline scenario, as Member States will continue to pay the long-term care benefits under the same coordination rules as before. The impact would only manifest itself if benefits that are currently outside the scope of the existing rules would be included in the list. For detailed budgetary impact for individual Member States see Tables 2.19-2.23 in Annex XXVI. Impacts on fundamental rights + Other impacts Regulatory Costs 0 The information obligations for institutions and citizens under this option will remain the same as under the baseline scenario as no new obligations will be introduced. The option facilitates the comparison of benefits in kind and in cash and could lead to fewer disputes between institutions. In an initial phase the new legal definition may increase the administrative burden for Member States and impact the exchange of information between Member States. In the long term the clarification would save time and money for Member States, especially in light of increasing demand for long-term care benefits. Risk of fraud and abuse + In general, additional clarifications will always make the legal situation clearer for the persons concerned and the institutions Specifying the national benefits concerned will reduce the risk of overlapping payments. Fair burden sharing between Member States 0 There are no fundamental changes in comparison to the current situation. Depending on the definition of long-term care benefits and the benefits to be included in the list, some benefits which would currently not be coordinated under the Sickness Chapter could be more or less beneficial for a Member State. Coherence with General, Specific and wider EU Objectives: Continue the modernisation of the EU Social Security Coordination Rules by further facilitating the exercise of citizens' rights while at the same time ensuring legal clarity, a fair and equitable distribution of the financial burden among the institutions of the Member States involved and administrative simplicity and enforceability of the rules. Establish a stable regime appropriate to long-term care benefits;  Ensure a fair and equitable sharing of the financial burden between Member States; Bring legal clarity and transparency for citizens, institutions and other stakeholders on coordination rules applicable to them. + This option, by introducing a legal basis for the already applicable rules, leads to stability of the already applied regime appropriate to long-term care benefits, while remaining compatible with the system currently applied under the baseline scenario. In parallel, it achieves legal clarity and transparency on the rules applicable both for citizens and institutions as well as other stakeholders. Although benefits in kind are provided by the residence State, costs of all cash and in kind benefits provided are at the expense of the competent Member State which ensures a fair distribution of the financial burden. This option however will not solve existing mismatches in case the competent Member State has no benefits in cash and the State of residence has no benefits in kind. Policy Option 2a: The benefits are provided by the Member State of residence without a supplement by the competent Member State even if the benefits in the Member State of residence, or the amount of reimbursement, are at a lower level than in the competent Member State Social impacts Clarification ++ Under this option, the same clarifying measures will be provided as under option 1 so that the person will always know that he or she needs to claim the benefits under the legislation of the Member State of residence. There will be no doubts even if it is not clear under the relevant legislation whether a certain benefit is a benefit in cash or in kind. Simplification + Only one Member State is exclusively competent to provide long-term care benefits to the person concerned. Priority rules against overlapping will be superfluous, which will simplify the procedure for mixed-type systems but there will need to be an additional reimbursement procedure for cash benefits. Protection of rights +/- This option would ensure that the persons concerned are always protected at the same level as all other persons in the Member State of residence. Affiliation to the system of the State of residence needs to be assimilated in cases where a person is not covered by the legislation of the State of residence. This in itself can be seen as positive in comparison to the baseline scenario. However, depending on the system or level of long-term care benefits in the Member State of residence, a person might be better or worse of in comparison to the level of benefits in the competent Member State as the level of protection will depend solely on the level of benefits in the residence State. Financial impact + Long-term care benefits in cash shall be provided by the State of residence and no longer by the competent Member State. This implies a considerable decrease of the budget which is needed to finance the cross-border use of long-term care benefits in cash (from € 203 Million to € 111 Million or a decrease of 45% (Annex XXVI– Tables 2.19 and 2.20)). The details of the estimates reveal that whereas more persons are using long-term care benefits in cash, the average amount is much lower. The total budgetary impact is estimated at € 701 million, which corresponds to a decrease of 12% in comparison to the baseline scenario (Annex XXVI – Tables 2.19 and 2.20). On the level of Member States an especially positive impact (less spending) is observed for Austria (decrease of 61% of expenditure on long-term care benefits in comparison to now), Italy (-53%) and Czech Republic (-41%) (Annex XXVI – Table 2.20). Primarily, a negative impact (more spending) in comparison to the other options is observed for the Slovak Republic (increase of 75% of expenditure on long-term care benefits in comparison to the baseline scenario), Croatia (+66%) and Hungary (+50%). These countries have a rather low level of sickness benefits in cash. They also have a rather low user rate of long-term care benefits in their country. Under this option, Member States will have to reimburse benefits in kind and in cash provided to persons who are insured under their social security systems, but who reside in another Member State where the level of long-term care benefits is higher. This could entail paying more than permitted under national legislation. Member States in which no crucial negative or positive financial impact is observed are: Estonia, Luxembourg, Sweden, Denmark, Cyprus and France. For detailed budgetary impact for individual Member States see Tables 2.19-2.23 in Annex XXVI. Impacts on fundamental rights +/- The impact is the same as for option 1 however; the impact on the right of property will vary as depending on the system or level of long-term care benefits in the Member State of residence, a person might be better or worse of in comparison to the level of benefits in the competent Member State. Other impacts Regulatory Costs - As only one Member State is competent for providing long-term care benefits, this option does not require further implementing arrangements or priority rules to avoid overlapping. The competent Member State and the State of residence will however need to set up a new reimbursement mechanism for benefits in cash. This option may be difficult to implement in Member States where the system providing long-term care benefits is decentralised. The State of residence will have to assume entitlement for benefits in cash for a person who is insured in another Member State and will be confronted with an increase in cases (from 45.000 to 80.000 per year, based on current estimations of recipients of cross-border long-term care - table 2.18 - Annex XXVI). The administrative costs for long-term care are expected to diminish in comparison to the baseline scenario, but the relative share of the regulatory costs in the total budget for long-term care could increase slightly (combined impact for both benefits in cash and in kind - table 55 - Annex V). Risk of fraud and abuse - The risk of fraud and abuse is slightly higher than in the baseline scenario. Member States with more generous long-term care benefits warned that this option could lead persons to move to a Member with a higher level of benefits and claim long-term care benefits there. This in itself is not fraud or abuse, but it can contribute to the perception of so-called 'opportunistic behaviour'. Fair burden sharing between Member States +/- Both the competent Member State and the Member State of residence contribute to the costs of granting the benefit to the person concerned. The competent Member State will have to reimburse the costs made in the Member State of residence, according to the level of the State of residence – even if this is higher or the Member State of residence would anyhow provide the benefits on the basis of its national legislation. This may entail a higher or lower share of burden depending on the respective level of benefits in the Member States concerned. Coherence with General, Specific and wider EU Objectives: Continue the modernisation of the EU Social Security Coordination Rules by further facilitating the exercise of citizens' rights while at the same time ensuring legal clarity, a fair and equitable distribution of the financial burden among the institutions of the Member States involved and administrative simplicity and enforceability of the rules. Establish a stable regime appropriate to long-term care benefits;  Ensure a fair and equitable sharing of the financial burden between Member States; Bring legal clarity and transparency for citizens, institutions and other stakeholders on coordination rules applicable to them. + This option introduces a stable regime appropriate to long-term care benefits. The regime however differs from the currently applied rules and thus will require adaptation before full stability is achieved. In parallel, the option brings legal clarity and transparency on the rules applicable both for citizens and institutions as well as other stakeholders. Although the overall costs for the spending on long-term care benefits in cash is decreased, this option might be less effective at achieving the objective of a fair and equitable distribution of financial burden between Member States as the costs are always reimbursed at the level of the residence State. Also, introducing a separate reimbursement procedure for long-term care benefits in cash which will require setting up of a new system for the exchange of information between Member States will entail additional regulatory costs compared to the baseline scenario. Policy Option 2b: The competent Member State provides a supplement to the beneficiary in the event that the benefits in the Member State of residence, or the amount of reimbursement, are at a lower level than in the competent Member State Social impacts Clarification + Under this option, the person will always know that he/she needs to claim the benefits under the legislation of the Member State of residence. However, the person may also need to introduce a claim for paying the supplement in the competent Member State, which can only be done after the initial claim has been paid by the Member State of residence. Simplification -- This option is more complex than the baseline scenario as it opens simultaneous entitlements under the legislation of several Member States. Priority rules will have to be drawn up and a procedure will need to be developed for the calculation of the supplement and how the supplements shall be settled. Moreover, the option deviates from currently applied sickness logic which is consistent with the Court’s case-law. Protection of rights ++ The social impact is the same as for option 1 and in addition the insured person will always receive the highest benefit to which he/she would have been entitled to in the competent Member State. Financial impact -- It is estimated that the total expenditure for long-term care benefits would increase to € 1.4 billion, of which € 1.15 billion is for benefits in kind (an increase of 95% in comparison to the baseline scenario) and € 253 million for benefits in cash (an increase of 25%) (Annex XXVI – Table 2.24). The differences are caused by the supplement, which is estimated at € 560 million for long-term care benefits in kind and € 142 million for long-term care benefits in cash which come from the account of the competent Member State. This option has no positive budgetary impact on any of the Member States. The highest increase in comparison to the current scenario is estimated to take place in Sweden (+318%), the Netherlands (+297%) and Finland (+ 248%). For detailed budgetary impact for individual Member States see Tables 2.19-2.23 in Annex XXVI. Impacts on fundamental rights + The impact is the same as for option 1 and in addition the insured person will always receive the highest benefit to which he/she would have been entitled to in the competent Member State. Other impacts Regulatory Costs -- This option is more complex than the baseline scenario as it opens simultaneous entitlements under the legislation of two Member States: one to be provided with the actual benefit and the other for receiving the supplement. A procedure to compare the level of benefits between the competent Member State and the State of residence needs to be set up, as well as a procedure to settle the payment of the supplement. It will necessitate an additional exchange of information between the Member State of residence and the Member State competent for paying the supplement. Risk of fraud and abuse - The risk of fraud and abuse is slightly higher than in the baseline scenario. Member States with more generous long-term care benefits warned that this option could lead persons to move to a Member with a higher level of benefits and claim long-term care benefits there. This in itself is not fraud or abuse, but it can contribute to a perception of so-called 'opportunistic behaviour'. Fair burden sharing between Member States +/- As the supplement is paid directly to the person concerned, it will not contribute to even burden sharing between Member States, but will only increase the total costs of the benefits provided by these Member States. Both the competent Member State and the Member State of residence have their share in granting the benefit to the person concerned. The competent Member State will have to reimburse the costs made in the Member State of residence, according to the level of the State of residence –even in this is higher or the Member State of residence would anyhow provide the benefits on the basis of its national legislation. If the level of benefits in the State of residence is lower, the competent Member State will also have to 'top up' the benefits to the level applicable under its own legislation. Coherence with General, Specific and wider EU Objectives: Continue the modernisation of the EU Social Security Coordination Rules by further facilitating the exercise of citizens' rights while at the same time ensuring legal clarity, a fair and equitable distribution of the financial burden among the institutions of the Member States involved and administrative simplicity and enforceability of the rules. Establish a stable regime appropriate to long-term care benefits;  Ensure a fair and equitable sharing of the financial burden between Member States; Bring legal clarity and transparency for citizens, institutions and other stakeholders on coordination rules applicable to them. + This option introduces a stable regime appropriate to long-term care benefits and offers the maximum level of protection to the person. The regime however differs from the currently applied rules and thus will require adaptation before full stability is achieved. In parallel, the option brings legal clarity and transparency on the rules applicable both for citizens and institutions as well as other stakeholders. The payment of the supplement for benefits provided in residence State increases the costs for the competent Member State. This option is thus less effective at achieving the objective of a fair and equitable distribution of financial burden between Member States. Furthermore, the priority rules and calculation rules for the reimbursement of the benefits and provision of the supplement need to be introduced as well as an administrative procedure for settling supplements. Based on the above tables, some preliminary conclusions can be drawn on the strengths and weaknesses of the different options and their overall effectiveness, efficiency and relevance in achieving the various objectives while avoiding excessive costs. Option 1 which introduces the legal basis for the already applicable rules, contributes positively to bringing legal certainty, transparency and stability of the already applied regime appropriate to long-term care benefits, while remaining compatible with similar system applicable to sickness benefits. These effects are maximised by the inclusion of clarifications under a separate Chapter categorising the rules for long-term care benefits separately and offering a clear distinction with the provisions on sickness benefits and social assistance. Citizens and institutions will benefit from the clarification of these rules. This option however will not solve existing mismatches in case the competent Member State has no benefits in cash and the State of residence has no benefits in kind. This option will have low implementation costs as it brings clarification without drastically changing the system of coordination and the information obligations following from that system. In light of the effectiveness at achieving the objectives this option is considered the most cost efficient . It is also coherent with wider EU Policy objectives, in particular, the planned review of the disability strategy 2010-2020 assessing progress to ensure the effective implementation of the UN Convention on the Rights of Disabled Persons across the EU and the ongoing work to promote a social agenda to support the economic recovery ensuring a Triple A social rating for Europe, which advocates greater efficiency in allocation of social protection to challeng