If I took out early 401k withdrawal to pay bills when I was sick do I have to pay a 10 percent penalty or can I claim what i took out under other about waving penalty?

If you are younger than 59 1/2 and made 401(k) withdrawals in 2023 to cover bills and food while you're sick, you aren't exempt from the 10% early withdrawal penalty. Only unreimbursed medical expenses over 7.5% of your AGI would qualify for the exception.

After 12/31/2023, there's an exception for one distribution per calendar year for personal or family emergency expenses, up to the lesser of $1,000 or vested account balance over $1,000 (made after 12/31/2023).

Please read this IRS document for more information.