SNEED, Circuit Judge:
This is an appeal from the grant of a preliminary injunction against enforcement of the State of California’s transfer of assets rule for medical assistance eligibility. Plaintiffs and appellees are a class of aged, blind, and disabled individuals who have been denied Medicaid (known in California as “Medi-Cal”) benefits by application of California’s transfer of assets rule, on the grounds that prior to applying for benefits, they transferred assets for less than adequate consideration in order to become eligible for assistance. They brought suit in the district court alleging that the California rule, which they allege is more strict than federal rules for determining eligibility, has been preempted by the Boren-Long Amendment to the Social Security Act, Pub.L.No.96-611, sec. 5(a)-(c), §§ 1613(c), 1902(j), 94 Stat. 3566, 3567-68 (1980) (codified at 42 U.S.C.A. §§ 1382b(c), 1396a(j) (Supp. 1975-1981)) (hereinafter cited to U.S.C. and U.S.C.A. only). Jurisdiction in the district court was based on 28 U.S.C. § 1343(3) and (4) and on 28 U.S.C. § 1331. The district court granted the preliminary injunction and the State of California appeals. We affirm.
I.
BACKGROUND
A. Applicable Law
1. Supplemental Security Income The Social Security Act defines available resources for the purpose of determining eligibility for Supplemental Security Income (SSI) for the aged, blind, and disabled at 42 U.S.C. § 1382b (1976 & Supp. II 1978). In determining whether an individual’s resources exceed the limits for SSI eligibility, the Social Security Administration must exclude certain assets from consideration, including the individual’s home, automobile, household goods, and personal effects.1
The Boren-Long Amendment alters section 1382b by adding a requirement that any transfer of assets for less than fair value within 24 months preceding the application for assistance shall be presumed to have been for the purpose of establishing eligibility for benefits or assistance under the Act. Assets so transferred shall be included in the applicant’s resources for the purpose of determining eligibility based on need. 42 U.S.C.A. § 1382b(c) (Supp. 1975-1981).2 Assets excluded under section [1319]*13191382b(a) are also excluded under the Amendment, however, so that the transfer of an individual’s home for less than fair value, for example, does not cause a denial of benefits under the Boren-Long Amendment.3
2. Medicaid
Medicaid provides federal financial assistance to approved state plans furnishing medical assistance to aged, blind, or disabled individuals whose income and resources are insufficient to meet the costs of necessary medical services. 42 U.S.C. § 1396 et seq. (1976). A state Medicaid program must provide coverage to the “categorically needy” — including those individuals who receive SSI for the aged, blind, and disabled. 42 U.S.C. § 1396a(a)(10)(A); 42 C.F.R. § 435.4. States may provide coverage to the “medically needy” — those individuals with income and resources exceeding the limits for SSI eligibility, but nevertheless insufficient to meet the costs of necessary medical care. 42 U.S.C. § 1396a(a) (10)(C); 42 C.F.R. § 435.4.
If a state plan does provide assistance to the “medically needy,” it may apply a transfer of assets rule similar to the federal rule for SSI to those applicants. The BorenLong Amendment changes the Social Security Act’s rules for Medicaid plans, 42 U.S.C. § 1396a (1976), to allow states to deny medical assistance to individuals who are eligible only because they have disposed of resources for less than fair market value. 42 U.S.C.A. § 1396a(j) (Supp. 1975-1981). However, the state plan for implementing denial of Medicaid assistance to such individuals can be no more restrictive than the federal law governing the denial of SSI, except that states may extend the period of ineligibility beyond two years where the uncompensated value of disposed of resources exceeds $12,000, 42 U.S.C.A. § 1396a(j)(2).4
B. Standard Of Review
The grant or denial of a preliminary injunction should be reversed only if the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact. Aleknagik Natives Ltd. v. Andrus, 648 F.2d 496, 501 (9th Cir. 1980); Miss Universe, Inc. v. Flesher, 605 F.2d 1130, 1132-33 & n.5 (9th Cir. 1979).
[1320]*1320As this court frequently has stated, to obtain a preliminary injunction the moving party must demonstrate either a combination of probable success on the merits and the possibility of irreparable injury, or that serious questions are raised and the balance of hardships tips sharply in the moving party’s favor. We also have observed frequently that the greater the relative hardship to the moving party, the less strong need be the showing of probable success that is required. William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 526 F.2d 86, 88 (9th Cir. 1975); Benda v. Grand Lodge of International Association of Machinists, 584 F.2d 308, 315 (9th Cir. 1978).
II.
DISCUSSION
We hold that the district court correctly applied the above standard in finding that plaintiffs-appellees are entitled to a preliminary injunction under either branch of the test.
A. Under The First Branch Of The Test
1. Probable Success On The Merits
Turning to the probable success on the merits of the plaintiffs-appellees, the Boren-Long Amendment, as already mentioned, prohibits states from applying to Medicaid applicants transfer of assets rules more restrictive than the rules for recipients of SSI. See 42 U.S.C.A. §§ 1396a(j), 1382b(c) (Supp. 1975-1981); see n.2 & 4, supra. The California rule appears to be significantly more restrictive in at least one respect. In two other respects there are differences of lesser and varying significance.
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SNEED, Circuit Judge:
This is an appeal from the grant of a preliminary injunction against enforcement of the State of California’s transfer of assets rule for medical assistance eligibility. Plaintiffs and appellees are a class of aged, blind, and disabled individuals who have been denied Medicaid (known in California as “Medi-Cal”) benefits by application of California’s transfer of assets rule, on the grounds that prior to applying for benefits, they transferred assets for less than adequate consideration in order to become eligible for assistance. They brought suit in the district court alleging that the California rule, which they allege is more strict than federal rules for determining eligibility, has been preempted by the Boren-Long Amendment to the Social Security Act, Pub.L.No.96-611, sec. 5(a)-(c), §§ 1613(c), 1902(j), 94 Stat. 3566, 3567-68 (1980) (codified at 42 U.S.C.A. §§ 1382b(c), 1396a(j) (Supp. 1975-1981)) (hereinafter cited to U.S.C. and U.S.C.A. only). Jurisdiction in the district court was based on 28 U.S.C. § 1343(3) and (4) and on 28 U.S.C. § 1331. The district court granted the preliminary injunction and the State of California appeals. We affirm.
I.
BACKGROUND
A. Applicable Law
1. Supplemental Security Income The Social Security Act defines available resources for the purpose of determining eligibility for Supplemental Security Income (SSI) for the aged, blind, and disabled at 42 U.S.C. § 1382b (1976 & Supp. II 1978). In determining whether an individual’s resources exceed the limits for SSI eligibility, the Social Security Administration must exclude certain assets from consideration, including the individual’s home, automobile, household goods, and personal effects.1
The Boren-Long Amendment alters section 1382b by adding a requirement that any transfer of assets for less than fair value within 24 months preceding the application for assistance shall be presumed to have been for the purpose of establishing eligibility for benefits or assistance under the Act. Assets so transferred shall be included in the applicant’s resources for the purpose of determining eligibility based on need. 42 U.S.C.A. § 1382b(c) (Supp. 1975-1981).2 Assets excluded under section [1319]*13191382b(a) are also excluded under the Amendment, however, so that the transfer of an individual’s home for less than fair value, for example, does not cause a denial of benefits under the Boren-Long Amendment.3
2. Medicaid
Medicaid provides federal financial assistance to approved state plans furnishing medical assistance to aged, blind, or disabled individuals whose income and resources are insufficient to meet the costs of necessary medical services. 42 U.S.C. § 1396 et seq. (1976). A state Medicaid program must provide coverage to the “categorically needy” — including those individuals who receive SSI for the aged, blind, and disabled. 42 U.S.C. § 1396a(a)(10)(A); 42 C.F.R. § 435.4. States may provide coverage to the “medically needy” — those individuals with income and resources exceeding the limits for SSI eligibility, but nevertheless insufficient to meet the costs of necessary medical care. 42 U.S.C. § 1396a(a) (10)(C); 42 C.F.R. § 435.4.
If a state plan does provide assistance to the “medically needy,” it may apply a transfer of assets rule similar to the federal rule for SSI to those applicants. The BorenLong Amendment changes the Social Security Act’s rules for Medicaid plans, 42 U.S.C. § 1396a (1976), to allow states to deny medical assistance to individuals who are eligible only because they have disposed of resources for less than fair market value. 42 U.S.C.A. § 1396a(j) (Supp. 1975-1981). However, the state plan for implementing denial of Medicaid assistance to such individuals can be no more restrictive than the federal law governing the denial of SSI, except that states may extend the period of ineligibility beyond two years where the uncompensated value of disposed of resources exceeds $12,000, 42 U.S.C.A. § 1396a(j)(2).4
B. Standard Of Review
The grant or denial of a preliminary injunction should be reversed only if the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact. Aleknagik Natives Ltd. v. Andrus, 648 F.2d 496, 501 (9th Cir. 1980); Miss Universe, Inc. v. Flesher, 605 F.2d 1130, 1132-33 & n.5 (9th Cir. 1979).
[1320]*1320As this court frequently has stated, to obtain a preliminary injunction the moving party must demonstrate either a combination of probable success on the merits and the possibility of irreparable injury, or that serious questions are raised and the balance of hardships tips sharply in the moving party’s favor. We also have observed frequently that the greater the relative hardship to the moving party, the less strong need be the showing of probable success that is required. William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 526 F.2d 86, 88 (9th Cir. 1975); Benda v. Grand Lodge of International Association of Machinists, 584 F.2d 308, 315 (9th Cir. 1978).
II.
DISCUSSION
We hold that the district court correctly applied the above standard in finding that plaintiffs-appellees are entitled to a preliminary injunction under either branch of the test.
A. Under The First Branch Of The Test
1. Probable Success On The Merits
Turning to the probable success on the merits of the plaintiffs-appellees, the Boren-Long Amendment, as already mentioned, prohibits states from applying to Medicaid applicants transfer of assets rules more restrictive than the rules for recipients of SSI. See 42 U.S.C.A. §§ 1396a(j), 1382b(c) (Supp. 1975-1981); see n.2 & 4, supra. The California rule appears to be significantly more restrictive in at least one respect. In two other respects there are differences of lesser and varying significance. Whether these latter two standing together, but without the first, would be significantly more restrictive is doubtful; however, they do not stand alone. After considering all differences we conclude that the California rule, when considered as a whole, appears to be significantly more restrictive. We recognize that the district court may well conclude, when considering whether to make the injunction permanent, that certain of the differences are insufficiently significant to be enjoined.
a. Transfer of exempt property.
Federal law, as already mentioned, excludes certain exempt assets, including homes, from consideration as transferred assets for SSI eligibility purposes. See supra pp. 1318-1319 & n.l. Only the transfer of non-exempt property can result in denial of benefits. The California rule, on the other hand, considers the value of exempt assets in its resources determination if they are transferred for less than fair value, and only excludes it when the property continues to be used by the transferor in the manner which caused its exempt status. Excerpt of Record at 242. This policy is clearly in conflict with federal law. The State’s argument that Social Security Act exemptions, 42 U.S.C. § 1382b(a) (1976 & Supp. II 1978), are conditioned upon the resource being used both before and after its transfer for the purpose which caused its exempt status, State Brief at 22, is unconvincing. It is the status of property at the time of transfer, not thereafter, that determines whether it is exempt or non-exempt.
To support the State’s argument the parenthetical expression “(but subject to the exclusions under subsection (a) of this section)” of 42 U.S.C. § 1382b(c)(l) should have included an exception which would have read somewhat as follows:
“(but subject to the exclusions under subsection (a) of this section, except that the exclusion under subsection (a)(1) is applicable only so long as the individual continues to use the home as his principal place of residence following a transfer described in this paragraph ).”
We have no authority to add such an exception to the statute. Thus, this California rule is significantly more restrictive than federal law.
b. Ineligibility period limited to 24 months after transfer.
The SSI transfer rules only apply to transfers occurring within 24 months prior to application. 42 U.S.C. § 1382b(c)(l) (Supp. 1975-1981.) The Boren-Long Amendment creates a 24-month period after the date of transfer during which the resources transferred for less than fair market value to achieve SSI eligibility are [1321]*1321deemed owned by the transferor for the purpose of determining SSI eligibility. 126 Cong.Ree. S16505-06 (daily ed. Dec. 13, 1980) (deemed ownership) (remarks of Senator Long). For example, if on September 1, 1981, an applicant gave away property worth $3,000 prior to applying for SSI, and the applicant’s only remaining asset is a bank account of $200, for the purpose of determining SSI eligibility the applicant will be deemed to have resources of $3,200. The uncompensated value of $3,000 will continue to count against the applicant until September 3, 1983.
The Amendment also permits a state to implement a similar ineligibility period for Medicaid. 42 U.S.C. § 1396a(j)(l) & (2) (Supp. 1975 — 1981). This period is limited to 24 months when the value of the disposed resources does not exceed $12,000. See 42 U.S.C. § 1396a(j)(2) (Supp. 1975-1981); State Brief at 31-32; Plaintiffs-Appellees’ Brief at 17. However, when the value of the disposed resources exceeds $12,000, the state’s plan may provide for a period of ineligibility of more than 24 months provided the period bears a reasonable relationship to the value of such resources. Id. States also have the option of adopting transfer rules that are more lenient than the rules for SSI. See 42 U.S.C. § 1396a(j)(3).
The California rule does not limit its application to transfers occurring within the previous two years, as it must for transfers valued at less than $12,000. See 22 Cal.Admin.Code § 50408(b).5 However, the California rule may in fact be in substantial compliance when the practical effect of the way it implements the ineligibility period is considered.6 These differences, therefore, may be of no significance.
e. Convincing evidence.
The federal statute allows applicants to overcome the presumption that assets were transferred to obtain eligibility with “convincing evidence” that the transaction was exclusively for some other purpose. 42 U.S.C. § 1382b(c)(2). The California rule is more precise and, by imposing specific requirements to overcome the presumption, is arguably more restrictive.7 Again the significance of this difference is conjectural.
[1322]*13222. Irreparable Injury
Plaintiffs have shown a risk of irreparable injury, since enforcement of the California rule may deny them needed medical care. That is a sufficient showing.
B. Under The Second Branch Of The Test
Even if plaintiffs-appellees had not shown probable success on the merits, they would certainly have raised serious questions. Where the meaning of the Medicaid legislation or its implementing regulations is unclear, the resulting uncertainty is a consequence of a failure of the governmental process to operate efficiently. The financial consequences of this inefficiency under the circumstances of this case ought not to be visited upon individuals such as the plaintiffs-appellees. Balancing the medical or financial hardship to the plaintiffs-appellees against the financial hardship to the state resulting from its inability to recover for medical services should its rules ultimately be held valid, it was not an abuse of discretion for the district judge to find that the balance of hardships tipped sharply in favor of plaintiffs.
Inasmuch as the exhibits about which the plaintiffs-appellees complain were not considered in reaching our decision, their motion to strike them is GRANTED. The motion of defendants-appellants for judicial notice of the exhibits is DENIED, except that the request that appellees’ exhibits be struck is GRANTED. The district court’s grant of a preliminary injunction is AFFIRMED.
SO ORDERED.