Traditional IRA Withdrawal for Paying Medical Insurance while Unemployed

[jonmon44]

One of the exceptions for having to pay a 10% penalty on withdrawals from a Traditional IRA is when using the funds to pay for medical insurance while being unemployed (receiving 12 or more weeks of unemployment).  I'm wondering whether this rule applies for those who are married filing jointly where the spouse is employed.  Will the couple have to pay the 10% penalty since the spouse is employed?  Must both parties be unemployed to qualify?  And does it matter who technically pays for the medical insurance?  For example, must the unemployed person prove that he/she paid the medical insurance (out of a bank account or using a credit card held by only that person, and not held jointly), or is it ok if the spouse technically paid for the medical insurance (and through a employer-sponsored plan)?

[Opus 17]

If the spouse has employer-sponsored insurance, you can't use IRA funds to "pay" the premiums and get the penalty exception (what you are really asking about is using your IRA to offset the amounts deducted from the spouse's paycheck.  This is not allowable for the penalty exception.)

IRAs are owned by individuals.  If Spouse A is unemployed, spouse A may withdraw money from an IRA owned by spouse A to pay premiums for insurance that covers spouse A, spouse B, and their dependents.  The insurance plan does not have to be in spouse A's name.

However, if spouse B has an employer plan, spouse B is not actually paying premiums, and spouse B does not actually have insurance.  With employer plans, the employer has the insurance (which covers the employee, spouse and dependents) and the employer pays the premiums.  Any contributions required from the employee is technically paid by the employer only, with the employee agreeing to a salary reduction in return for the insurance benefit.

So it has to be private insurance or COBRA to make the 10% penalty exception, it can't be a sponsored plan.