Medical Card confusion - over 70

My dad has a medical card and was selected as one of the recent review. He only has the old age pension and is 75. He got a letter asking for his P45 (!), he last worked in 2003. My mother retired last year and wanted to apply as well (she is 66), and they both sent in their details. She receives a transition pension but in the next two weeks will move into the old age pension.

This is where it gets slightly complicated. My mother had some avcs and received a small lump sum (less than 50k - which paid off the mortgage) and a small weekly pension (which is less than 40 euro), so they well fulfill the income criteria. My parents have no other savings, other than a few k (<10) and their PPR.

They received a letter to say that their application was on hold. They rang the HSE who were worse than useless. I rang the HSE and was on for ages.

It was only through ringing Age Action that the lady there found out that because my mother's P45 when she finished work, was then replaced by a supplementary P45 when paying her the lump sum (from the AVC supplier) that they deemed she was still employed by them. Now she was never employed by them! Anyway she has to get a letter from Zurich to say this.

Isn't this nuts?

My dad's worried sick as he attends hospital three times a week and now thinks he'll have to pay the charge (it's a day clinic, but he doesn't understand).

Firstly your mother does not need to apply for a medical card. As your father is over 70 the medical card will be for HIM and his dependent (your mother).
It does not matter what age she is.

As the combined income appears to be well below the new allowable rate of €900 per week your Dad should stop worrying about loosing his card. This kind of confusion seems to be happening all the time, but generally gets sorted out eventually.

Send in the documents requested and make sure to add a clear note with them with a PPSN and applicants name and full address

He's sent in the documents. This is when it went 'on hold'. The issue is that the AVC payment when she retired made it look as if she had taken up another job in their eyes.