They can continue the healthcare if they want. There is somekind of adjustment made if he pays out of pocket. But Dad really won't need it. If he had Medicare Medicaid becomes his secondary. He gets dental and eye too. The premium will be lower if its just Mom. May want to check and see if she would qualify for Medicaid health insurance at the Community spouse. She should be able to keep the insurance just drop Dad. Call and ask the insurance carrier.
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Lils dad is in memory care and her mom in ALF in a different town. Here is a link to a previous message.
https://www.agingcare.com/questions/dad-in-private-pay-memory-care-mom-in-assisted-living-in-different-town-qualify-1-for-medicaid-or-sp-447930.htm?orderby=recent
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Did you perhaps mean that your dad is about to apply for Medicare?
How old are your parents?