I'd suggest looking into Amos suggestion--I am not sure how one goes about it, but it sounds like an interesting possibility, and one that would give you both an income and the flexibility that you would need to accomodate your health issues.

Meanwhile, while age discrimination is illegal, it is usually difficult to prove, so people just move on. In this case, though, the woman came right out and told you that you were qualified for the job, but she didn't want you because of your age. That is a pretty open and shut case.

Though a lawsuit can take a lot of time, in cases this blatant, employers have been known to settle quietly and quickly--particularly in a place like Washington, where misteps of this kind can be fatal for an organization--

Just a thought--