Sec. DDD-11. Department of Health and Human Services directed to adopt rules imposing penalty for transfers of assets. The Department of Health and Human Services is directed to adopt rules governing MaineCare eligibility to impose a penalty for the transfer to anyone other than a spouse of any asset for less than fair market value, whether the value of the asset is less than or equal to the average monthly cost of care, in the form of a one-month disqualification from MaineCare eligibility for nursing or waiver coverage. Similarly, transfers of assets valued in amounts greater than one month's cost of care but less than the value of 2 months' care result in a 2-month disqualification from nursing or waiver coverage under MaineCare.

Sec. DDD-12. Department of Health and Human Services directed to calculate community spouse allowance by consideration of income first. The Department of Health and Human Services is directed to adopt rules that require, in determining eligibility for MaineCare long-term care coverage and calculating the minimum monthly maintenance needs allowance of the recipient's or applicant's community spouse, the use of the so-called "income first" method. Under the "income first" method, income of the institutionalized spouse that could be made available to support the community spouse is allocated to the community spouse for purposes of determining whether the community spouse has sufficient income to meet the minimum monthly maintenance needs allowance. The community spouse's resource allowance may not be increased unless the community spouse's income does not meet the minimum monthly maintenance needs allowance after taking into account any income that may be made available from the institutionalized spouse.

Sec. DDD-13. Department of Health and Human Services directed to adopt rules identifying certain annuity contracts as countable assets for MaineCare eligibility. The Department of Health and Human Services is directed to adopt rules for MaineCare eligibility purposes to provide that the value of an irrevocable contract of annuity insurance purchased by an applicant or recipient is a countable asset unless the contract names the recipient as the only beneficiary or names the applicant's or the recipient's spouse as the beneficiary, prohibits a residual beneficiary in the event the community spouse dies before the payout period ends and provides no benefit to the community spouse other than a regular stream of income in