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(i) Action was primarily for a purpose unrelated to Medical Assistance eligibility, and

(ii) Denial of eligibility would work an undue hardship.

(5) Resources shall be considered to be unavailable to the institutionalized spouse under §D(3)(a) of this regulation only if the community spouse has willfully failed to, and refuses to, pay for care of the institutionalized spouse or cannot be located.

(6) Section D(3)(c) or (d) of this regulation may not be considered to be satisfied if the institutionalized spouse, or the institutionalized spouse's guardian or attorney in fact, has taken any action or otherwise assisted in limiting his or her support rights from the community spouse.

(7) The Department shall waive the requirements of §D(3)(c) or (d) of this regulation if the Department determines that denial of eligibility would work an undue hardship.

(8) Separate Treatment of Resources After Eligibility for Benefits Established. During the continuous period in which an institutionalized spouse is in an institution and after the month in which an institutionalized spouse is determined to be eligible for benefits under this chapter, resources of the community spouse may not be deemed available to the institutionalized spouse.

E. Permitting Transfer of Resources to the Community Spouse.

(1) In General. An institutionalized spouse may, without regard to Regulation .08K of this chapter, transfer to the community spouse, or to another for the sole benefit of the community spouse, an amount equal to the community spouse resource allowance as defined under §E(2) of this regulation, but only to the extent the resources of the institutionalized spouse are transferred to, or for the sole benefit of, the community spouse. The transfer shall be made as soon as practicable after the date of the initial determination of eligibility, taking into account such time as may be necessary to obtain a court order under §E(3) of this regulation.

(2) Community Spouse Resource Allowance Defined. The community spouse resource allowance is the amount by which the greatest of the following amounts exceeds the amount of resources otherwise available to the community spouse:

(a) $12,000, subject to adjustment under §G of this regulation;

(b) The lesser of the spousal share computed under §D(1)(ii) of this regulation or $60,000, subject to adjustment under §G of this regulation;

(c) The amount established under §F(4) of this regulation; or

(d) The amount transferred under a court order under §E(3) of this regulation.