Have Tax Questions? Ask a Tax Expert for Answers ASAP
The exception to the penalty for paying for medical insurance requires that unemployment benefits must have been collected for at least 12 consecutive weeks so you would not be able to claim that exception. If you are going to continue to need to withdraw funds there is an exception to the penalty if withdrawals are considered substantially equal period payments. There are 3 different methods for calculating the amount of the withdrawals and once the payments begin they must continue for the longer of 5 years or until age 59 1/2. Once an annual amount is determined under the amortization or annuitization methods, additional withdrawals from the same IRA account cannot be made until the 5 year period or age 59 1/2 requirement is met.
See pages 53 and 54 - http://www.irs.gov/pub/irs-pdf/p590.pdf
Unfortunately there are no exceptions to the 10% penalty for hardships. There is a remote possibility that the penalty could be waived on some withdrawals if Obama follows through on a proposal he made during his campaign. However, since the election is over there has been little discussion about this. See the link below:
I overlooked an exception that may be able to reduce some of the penalty. The exception is for medical expenses (including medical premiums) that exceed 7.5% of your adjusted gross income. So for example if your total medical expenses were $9,000, your IRA withdrawals were $20,000, and your AGI (including the IRA withdrawals) was $50,000 then the penalty would not apply to $5,250 [$9,000 - $3,750 (7.5% of $50,000)] of the withdrawals.
See page 53 - http://www.irs.gov/pub/irs-pdf/p590.pdf