rounded, in the case of any fraction, to the nearest whole 
number, but shall not in any case exceed 36 months.’’; 
and 
(C) by adding at the end the following new 
paragraph: 
‘‘(4)(A) If a surviving spouse otherwise eligible for 
payment of increased pension under subsection (c), (d), 
or (e) of section 1541 of this title on account of a child 
or the child disposes of covered resources for less than fair 
market value on or after the look-back date described in 
subparagraph (C)(i), the Secretary shall deny or dis-
continue payment of such increased pension for months 
during the period beginning on the date described in sub-
paragraph (D) and equal to the number of months cal-
culated as provided in subparagraph (E). 
‘‘(B)(i) For purposes of this paragraph, a covered re-
source is any resource that was a part of the corpus of 
the estate of the child that the Secretary considers that 
under all the circumstances, if the surviving spouse or the 
child had not disposed of such resource, it would be rea-
sonable that the resource (or some portion of the resource) 
be consumed for the child’s maintenance. 
‘‘(ii) For purposes of this paragraph, the Secretary 
may consider, in accordance with regulations the Sec-
retary shall prescribe, a transfer of an asset (including a 
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transfer of an asset to an annuity, trust, or other financial 
instrument or investment) a disposal of a covered resource 
for less than fair market value if such transfer reduces 
the amount in the corpus of the estate of the child that 
the Secretary considers, under all the circumstances, 
would be reasonable to be consumed for the child’s mainte-
nance. 
‘‘(C)(i) The look-back date described in this clause 
is a date that is 36 months before the date described in 
clause (ii). 
‘‘(ii) The date described in this clause is the date on 
which the surviving spouse applies for payment of in-
creased pension under subsection (c), (d), or (e) of section 
1541 of this title on account of a child or, if later, the 
date on which the surviving spouse (or the child) disposes 
of covered resources for less than fair market value. 
‘‘(D) The date described in this subparagraph is the 
first day of the first month in or after which covered re-
sources were disposed of for less than fair market value 
and which does not occur in any other period of ineligi-
bility under this paragraph. 
‘‘(E) The number of months calculated under this 
clause shall be equal to— 
‘‘(i) the total, cumulative uncompensated value 
of all covered resources so disposed of by the sur-
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viving spouse (or the child) on or after the look-back 
date described in subparagraph (C)(i); divided by 
‘‘(ii) the amount of the increased monthly pen-
sion that would be payable to the surviving spouse 
under subsection (c), (d), or (e) of section 1541 of 
this title on account of a child without consideration 
of such resources under paragraph (3), 
rounded, in the case of any fraction, to the nearest whole 
number, but shall not in any case exceed 36 months.’’; 
(2) in subsection (b)— 
(A) by inserting ‘‘(1)’’ before ‘‘The Sec-
retary’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(2)(A) If a child otherwise eligible for payment of 
pension under section 1542 of this title or any person with 
whom such child is residing who is legally responsible for 
such child’s support disposes of covered resources for less 
than fair market value on or after the look-back date de-
scribed in subparagraph (C)(i), the Secretary shall deny 
or discontinue the payment of pension to such child under 
section 1542 of this title for months during the period be-
ginning on the date described in subparagraph (D) and 
equal to the number of months calculated as provided in 
subparagraph (E). 
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‘‘(B)(i) For purposes of this paragraph, a covered re-
source is any resource that was a part of the corpus of 
the estate of the child or the corpus of the estate of any 
person with whom such child is residing who is legally re-
sponsible for such child’s support that the Secretary con-
siders that under all the circumstances, if the child or per-
son had not disposed of such resource, it would be reason-
able that the resource (or some portion of the resource) 
be consumed for the child’s maintenance. 
‘‘(ii) For purposes of this paragraph, the Secretary 
may consider, in accordance with regulations the Sec-
retary shall prescribe, a transfer of an asset (including a 
transfer of an asset to an annuity, trust, or other financial 
instrument or investment) a disposal of a covered resource 
for less than fair market value if such transfer reduces 
the amount in the corpus of the estate described in clause 
(i) that the Secretary considers, under all the cir-
cumstances, would be reasonable to be consumed for the 
child’s maintenance. 
‘‘(C)(i) The look-back date described in this clause 
is a date that is 36 months before the date described in 
clause (ii). 
‘‘(ii) The date described in this clause is the date on 
which the child applies for pension under section 1542 of 
this title or, if later, the date on which the child (or person 
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described in subparagraph (B)) disposes of covered re-
sources for less than fair market value. 
‘‘(D) The date described in this clause is the first 
day of the first month in or after which covered resources 
were disposed of for less than fair market value and which 
does not occur in any other period of ineligibility under 
this paragraph. 
‘‘(E) The number of months calculated under this 
clause shall be equal to— 
‘‘(i) the total, cumulative uncompensated value 
of all covered resources so disposed of by the child 
(or person described in subparagraph (B)) on or 
after the look-back date described in subparagraph 
(C)(i); divided by 
‘‘(ii) the amount of the monthly pension that 
would be payable to the child under section 1542 of 
this title without consideration of such resources 
under paragraph (1), 
rounded, in the case of any fraction, to the nearest whole 
number, but shall not in any case exceed 36 months.’’; 
and 
(3) by adding at the end the following new sub-
section: 
‘‘(c)(1) The Secretary shall not deny or discontinue 
payment of pension under section 1541 or 1542 of this 
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title or payment of increased pension under subsection (c), 
(d), or (e) of section 1541 of this title on account of a 
child by reason of the application of subsection (a)(2), 
(a)(4), or (b)(2) of this section to the disposal of resources 
by an individual to the extent that— 
‘‘(A) a satisfactory showing is made to the Sec-
retary (in accordance with regulations promulgated 
by the Secretary) that all resources transferred for 
less than fair market value have been returned to 
the transferor; or 
‘‘(B) the Secretary determines, under proce-
dures established by the Secretary, that the denial 
or discontinuance of payment would work an undue 
hardship as determined on the basis of criteria es-
tablished by the Secretary. 
‘‘(2) At the time a surviving spouse or child applies 
for pension under section 1541 or 1542 of this title or 
increased pension under subsection (c), (d), or (e) of sec-
tion 1541 of this title on account of a child, and at such 
other times as the Secretary considers appropriate, the 
Secretary shall— 
‘‘(A) inform such surviving spouse or child of 
the provisions of subsections (a)(2), (a)(4), and 
(b)(2), as applicable, providing for a period of ineli-
gibility for payment of pension or increased pension 
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