You have to be "unable to perform any substantial gainful activity," as certified by a doctor.
Many people who meet the definition of medically disabled are not disabled for tax purposes because they can work a job or other gainful employment. Just being unemployed is not an exception to the penalty, even if you also have a long-term illness. You must have a doctor certify that you are unable to perform any substantial gainful work due to your illness. If you claim in turbotax that you are disabled (to avoid the penalty) and then are audited, you may need to show your doctor's certification or other medical records.
From the IRS:
Disabled.
If you become disabled before you reach age 59½, any distributions from your traditional IRA because of your disability aren't subject to the 10% additional tax.
You are considered disabled if you can furnish proof that you can't do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued, and indefinite duration.