First of all, there's nothing illegal about your father spending his money on himself. The only illegality that might come into it is if he applies for Medicaid or another
government assistance program and they ask him about recent expenditures but he doesn't tell them the truth. Only a false statement would be illegal. Specifically, anything your father spends to improve his own house would be a legitimate expense as far as Medicaid or other government programs is concerned.
The question is, given his income and assets, can your father get help from some government program with his prescription drug costs. The answer is yes, but probably not until he spends quite a bit of that $35,000 in savings. The Medicare Part D prescription drug program has a special Low Income Subsidy (LIS) to help people with low income and few assets (other than their homes, which are not counted). There are four categories of LIS. Two are for people who qualify for Medicaid -- for them, the LIS pays the Part D plan premium and deductible, reduces their copayments, and provides coverage in the "donut hole" gap. The eligibility rules for Medicaid vary a bit from state to state, but they all require low income and few assets. Your father's income is close to the allowable Medicaid limit, but Medicaid usually allows only $2,000 to $3,000 in assets other than a home. Until your father's assets are spent down -- on anything -- to below Medicaid limits, he wouldn't be eligible for either of these two LIS categories.
The good news is that there are two other categories of LIS that can help people who, like your father, have a bit too much money to qualify for Medicaid. Your father would already qualify with regard to income for either of these two categories, but his assets are still too high for either. If his assets were down to about half of what he has now, he might be eligible for one of these LIS categories. If so, they would eliminate his premium and deductible and lower his copayments. One of the categories can provide coverage in the donut hole gap.
To find out about and help your father apply for LIS assistance with his prescription drug costs, you can contact a local Social Security office or call them toll-free at 800-772-1213. Or, you can contact the local county social services or Medicaid office in the county where your father lives. To find the local office, use any Internet search engine and enter "Medicaid" and the name of your state. Or, you can call the Eldercare Locator toll-free at 800-677-1116 and ask for contact information for your local Medicaid office.