Hardship Withdrawal - Sensitive Medical Expenses

Hello All,

I find myself in a difficult position with requesting a hardship withdrawal from the 401k account I have through my employer. The reason for the withdrawal is medical, but I'm reluctant to provide documentation due to the sensitive nature of the expenses.

I am a cancer survivor, and part of my treatment involved the use of strong opiates to deal with pain. While the cancer seems to be defeated (at least for now), the opiate addiction isn't. While these are legally prescribed opiates, they are clearly having a negative impact on my personal and professional life, but I find myself unable to quit on my own.

My doctor has recommended that I check in to an in-patient rehabilitation clinic for opiate addiction. Such a facility, however, is very expensive, and is not fully covered by my medical insurance (my responsibility could be anywhere from 10k to 50k, depending on a variety of factors - my retirement funds can comfortably cover even the largest estimate, so I can "afford" it in that regard). Due to various other medical and personal expenses, I have already leveraged my loans and non-hardship withdrawal - this is my only remaining option.

For obvious reasons, I do not want to inform my employer that I am attending an in-patient rehabilitation clinic for drug addiction. My plan seems to require that I submit documentation detailing the costs, but I feel that doing so would jeopardize my continued employment or impact my career negatively in other aspects (regardless of whether or not it is legal or proper for them to do so, I find it likely that this will occur due to the nature of my industry).

What can I do to provide the requested data without revealing that it is related to drug addiction? Is it a crime to falsify this data by altering the bills to make it look as though it's for a different medical expense? What other recourse do I have? I'm desperate to get clean before it ruins my career, marriage, and life, but revealing this information may well do that anyway. I feel hopeless and trapped - is there anything I can do?

Thank you in advance for any information or advice you can provide.

I'm so sorry you are going through this.  It definitely is a crime to falsify date, so I wouldn't do that.  Others may have different advice, but can you consult an attorney versed in employment law?  Also, many employers are sympathetic to what their employees are going through.  You may be surprised. Here is an article that may help your situation --    https://americanaddictioncenters.org/rehab-guide/with-a-job   I also recommend counseling so you are not going through this alone.  One step at a time.

Does your employer offer an Employee Assistance Program?  A solution may be to go through the EAP, which is confidential.

@ratherbereading Oh wow, it IS a crime? I wasn't sure - I mean, as long as I pay taxes on it, it seems odd that it's legally actionable - I'm only taking out funds I added, after all, and intend to pay the appropriate tax difference. I was concerned after seeing how involved the IRS is, and it seems like those fears are justified. I'm really glad I asked, thank you. Regarding the impact to my career - I've seen others within my field, and within my organization specifically, experience negative effects when coming forward with information like this. Any consequences are always PRESENTED as something else, however we're talking about people with years of advancement and good performance getting written up or terminated for violations of the most obscure rules.

@ErnieG, can you go into a little more detail about what exactly an EAP is? It almost sounds like a third party system of advocates not directly related to the organization itself, does that sound accurrate? If that was the case, I'm still not sure how that would work in relation to my approval for a hardship withdrawal - it seems like the plan administrator would still need that info, and I'm not sure that an advocate would be permitted to give that kind of approval. Perhaps I am misunderstanding how this system works - would you mind helping to illuminate a bit more about how this works, and how I might best go about investigating this course of action?

If anyone else has any advice, resources, or personal experiences like this and think they might be helpful, please share as much as you feel comfortable. If you'd prefer to message me directly, please do that instead - I'll try to be diligent about checking responses and direct messages.

I just want to say again that I really appreciate everyone's input, even if it doesn't lead to a direct solution, it's nice to feel less alone.

I'm sorry for your situation and hope you get help. I find it terrible that an employer would hold it against an employee for getting help with opioid addiction as result on pain medication in conjunction with cancer treatment, but sadly I do understand your concerns. And hopefully your cancer is gone or stays in remission. Can you get your doctor to write up something that doesn't address the specific reasons or treatments citing HIPPA privacy issues that your Plan Administrator would accept in approving the Hardship as a qualified medical expense.

And while possibly not the route you may want to go, with all the talk of multi-billion dollar opioid settlements in the news, have you considered consulting a lawyer to see if you qualify for benefits under one or more of the class action suits? I have no idea if that is viable but just throwing it out there as an avenue you might explore.

10 hours ago, hardshipquestions said:

@ratherbereading Oh wow, it IS a crime? I wasn't sure - I mean, as long as I pay taxes on it, it seems odd that it's legally actionable - I'm only taking out funds I added, after all, and intend to pay the appropriate tax difference. I was concerned after seeing how involved the IRS is, and it seems like those fears are justified. I'm really glad I asked, thank you. Regarding the impact to my career - I've seen others within my field, and within my organization specifically, experience negative effects when coming forward with information like this. Any consequences are always PRESENTED as something else, however we're talking about people with years of advancement and good performance getting written up or terminated for violations of the most obscure rules.

@ErnieG, can you go into a little more detail about what exactly an EAP is? It almost sounds like a third party system of advocates not directly related to the organization itself, does that sound accurrate? If that was the case, I'm still not sure how that would work in relation to my approval for a hardship withdrawal - it seems like the plan administrator would still need that info, and I'm not sure that an advocate would be permitted to give that kind of approval. Perhaps I am misunderstanding how this system works - would you mind helping to illuminate a bit more about how this works, and how I might best go about investigating this course of action?

If anyone else has any advice, resources, or personal experiences like this and think they might be helpful, please share as much as you feel comfortable. If you'd prefer to message me directly, please do that instead - I'll try to be diligent about checking responses and direct messages.

I just want to say again that I really appreciate everyone's input, even if it doesn't lead to a direct solution, it's nice to feel less alone.

Maybe "crime" isn't the word I was looking for.  Unethical maybe?  But I can fully understand why you would consider that route - no judgment.   Please do keep us posted.

So there are a few questions depending on the answers will hopefully help your situation:

1. Who approves the hardship?  Does the hardship request go through your HR department and then they send it on to the 401(k) provider or does the 401(k) provider make the determination on whether or not the hardship is approved?  If this is the case, your HR department shouldn't have any reason to get involved.

2. Can the service provider, provide you a detailed statement with generic or less descriptive coding?  This provider has probably had this question before especially since there can be a stigma against mental health issues.  Kudos to you for recognizing the issue and being strong enough to ask for help. 

If neither of these work, I would go to HR and speak with the person who handles the FMLA and or leave request.  This is the designated person in the company that helps employees get approved leave for medical reasons whether it is theirs or someone in their family.  Make sure you start the conversation that is regarding confidential health information and you need it to stay that way.  The HR group is there to help and if your company wants to help you be successful, because it makes them successful.  I suggest to keep detailed notes of the information you provide, to whom, and the date and times, so if you feel you are wronged in anyway, you have leverage.  I also, think this will give you peace of mind.

Best regards and honestly I hope all goes well for you!  

14 minutes ago, llkmrw said:

The HR group is there to help

I'll just mention here that while this is the way it should be, it is NOT necessarily the case. I don't presume to advise on anything to do with this,  other than to echo the suggestion that due to the gravity and complexity of the situation, it might be well worth a consultation with a good attorney who has expertise in the health/FMLA issues, and ERISA issues. I join in with others in sincerely wishing you successful treatment, and best of luck to you.

Assuming the OP also needs either FMLA protected time or ADA reasonable accommodation, both of these are also going to require medical documentation of those needs to HR.  In the end, hopefully OP can get a medical bill that doesn't state the issue, but generally medical bills do have the rehab/outpatient name on them.  

I do know in our small employer setup, I as HR have to be the one to review hardships, but can't imagine holding this against you any more than any other issue that is a hardship. I've seen plenty over the years!  I don't really see a way around providing documentation of the need.

First, let me say that I really appreciate all of the replies. It's hard not to feel isolated in a situation like this, so having some feedback is really valuable to me and makes me feel a bit more calm about the entire issue.

For the sake of readability, I'll write the questions I have now here at the top, with my responses below that.
1) How can I determine if falsifying the documents rises to the level of a criminal act, vs an unethical one? If I don't see the phrase "under penalty of perjury", it seems unlikely that providing false documentation would constitute fraud, particularly since these are funds I've paid in, as opposed to funds belonging to another person or entity.
2) How can I find out who actually reviews this information, without asking my HR team directly? For the sake of clarity, I feel safe identifying Fidelity as the site where my 401k information is administered.

@Lou S. - I've been following the legal developments around it, however it looks like most of the successful cases are more aligned with payouts to a state vs payouts to individuals - the intention being that the state will bear the burden of programs designed to deal with the issue. Also, I imagine there's a concern about giving a bunch of addicts a lump sum in a settlement, which I have to say is probably justified.

@ratherbereading - This point actually interests me quite a bit, because I wonder how dangerous it would be to lie about it. If it's not legally actionable, it seems like attempting to lie about the costs (assuming I could do so convincingly) would be a potential workaround. Even if I got caught doing it, worst case I could come clean and explain that the stigma of addiction was my motivation in attempting to falsify the data. How could I ascertain whether or not lying about this rises to the level of criminal conduct vs unethical conduct? If the documentation doesn't contain the phrase "under penalty of perjury", I wonder how dangerous it is. To be clear, I'm not directly asking whether or not it's illegal (as giving/taking legal advice on the internet is unwise), I'm asking how I could try to determine the legality of the situation, or what resources would help me determine that, short of legal council.

@llkmrw - Great questions. 1) I'm not sure. How could I investigate this, aside from directly asking my HR team? 2) I'm not sure that's possible - from the sound of things, they're looking for an itemized list of costs, so I'm not sure fudging codes will help - in fact, the provider may be specifically forbidden from doing so. As far as approaching my HR team, even with documentation of who I spoke with, proving a leak is nearly impossible. It may be wrong of me to feel this way, but I just don't trust anyone to keep this classified - this is my livelihood, and with a wife and child to support, I feel it's too dangerous to rely on anyone else to ensure I'm not burned here.

@Belgarath - This is the core of my concern. While I'd like to believe the best about people, when it comes to my career and the future of my wife and child, I simply can't trust the discretion of other people. I've experienced gossipy HR people in the past, and it's just too dangerous. Side note: I, too, am a David Eddings fan! If only The Will and The Word could help me here.

@rr_sphr - I have a great deal of vacation time built up and intend to leverage this instead of FMLA, obviating the need to provide documentation for that purpose.

Again, I'd like to thank everyone for their replies and words of encouragement. While I know we're all strangers on the internet, it's nice to feel like someone, somewhere appreciates my plight.

Let me add my voice to the choir and say how sorry I am that you are going through all of this. Were it not for the fact that the calendar is unfavorable to you given that the October 15th deadline for pension filings is fast approaching you might have much more participation in this thread.

Also, please recognize that those of us who use our real names might also be restricted not only from discussing when or how something might rise to the level of a crime but also from discussing the matter focusing on merely unethical conduct.

With that said, I can't believe you are the first person seeking treatment from your treatment center of choice to face this issue.  Have you asked them if they have already developed a completely ethical solution?  Just thinking out loud here but maybe they are willing to send you summary billings from an associated doctor who uses a location other than the treatment center itself for his/her address?  "Medical treatment" might be all that is necessary to satisfy the 401(k) gatekeepers, be they Fidelity or somebody associated with the plan's Administrative Committee.

Here are a couple of links you might find interesting:

https://www.employeefiduciary.com/blog/hardship-401k-distributions-frequently-asked-questions

and

https://www.irs.gov/pub/foia/ig/spder/tege-04-0217-0008.pdf

Having both at hand will better arm you in your battle to legally and ethically arrange for your hardship  distribution.