She is also elderly, still works, and refuses to pay for care for him (luckily he doesn't need much now). Their finances are separate (bank accounts, retirement, etc.), but I'm finding that he isn't eligible for government programs because of her income (his is low and hers is high). What are the options?
But I agree with PStegman: if your father's needs aren't currently a problem - i.e. you're not yet concerned that his welfare is at risk - you should leave them to sort this out on their own. You've no cause to meddle.
How elderly is "elderly", by the way?
But we all would love to hear more about the step mother and her reasons for not wishing to support her husband. I do understand her frustration about working her entire life and having nursing care take so very much. But this could be her and she could be needing nursing care. What would she say if the shoe were on the other foot?
At this point, if they divorce it will be looked at as Medicaid avoidance and he will likely be declined. It can get appealed but you will need an attorney to deal with the appeal as they are sticky. So pay for an experienced attorney now or pay later, but you & Dad really need to speak with someone legal before this goes on too far. i would go with Dad without his bride to get a feel on what the options are. If you are in a community property state, then she is SOL in keeping funds from him for whatever they have acquired since their marriage. If she co-mingled her $ from before they married, those are toast on her keeping them too. Property in her name which she has kept in her name with no joint use, she may be able to keep but if any of this was presented as their's, she is toast on keeping it from him. A good pit bull of a divorce attorney may be consulted with by your elder law attorney to make this happen. None of this is going to be pretty but with NH costing between 5K - 15K a month, you have to go hard-ball on all this, unless you have the ability both financial & caregiving time to take him in & do for him forever.
About the spousal impoverishment, what could happen is that if she does that and dad is unable to do for himself, he could be declared a "ward of the state" and then the state appoints a guardian for him who manages all for him and his finances. the state would pay for his care and would seek reimbursement from any possible assets he or his spouse has (not you assets). Here is where it could get ugly…..since he is a "ward" neither you or the wife need to be contacted regarding his care, or where he lives, etc. The guardian can have him move to a NH in another county which is desperate to fill their beds. This would be just awful, really you don't want this to happen. And then as this winds through the system, the state could try to place a lein against any assets that are community property or have been presented as a joint asset as spouse refusal is hard to do.
Now what is her issue? Is she mentally sound? is this new & totally not-like-her type of behavior? Could there be something wrong with her….like she has dementia or other illness that is causing paranoia. Or is she just basically a cold hearted witch? It's odd behavior, especially for a female. What was the situation for her prior marriage and her relationships with her kids? Could any of this be coming from her kids???
That said, I feel very sorry for your father. How can this make him feel? Is he aware of his wife not willing to help him in his old age? Did he do something to make her become so miserly with her money? I understand her hard work and wanting to maintain her finances. But when we marry, we are supposed to love each other in sickness and health. I would be very in touch with his feelings about all of this. I come from a family of misers and my husband is a bit miserly. Sometimes it makes me feel very sad and depressed. Take care of your father's emotional needs as well.
And if they do divorce, but continue to maintain same residence, I think Medicaid will consider them a household despite the divorce. and Medicaid always looks "back" regarding finances, so I suspect the "divorce" would be called into question.
One option is for him to rely on his income only and try to self-pay for all of his care. That may not be realistic or possible.
Is he a veteran? If so, help him look into what help he might be eligible for.
Another option is divorce. They could, of course, continue to live together, but not have the legal status that is a disadvantage to your father. I would certainly not pursue this without competent legal advice.
In fact, getting advice from an attorney specializing in Elder Law would be a good idea at this point.