First, I hope you have contacted a health benefits navigator to make sure it's true that you "need this money to purchase medical insurance." Under the Affordable Care Act, with SSDI-level income, you should be able to get a subsidy to make health insurance costs more manageable, if you don't qualify for Medicaid.
The recent notice that your medical benefits stopped effective December 2013 -- does it say why? Usually a COBRA notice would be proof that your employment has terminated.
An employer shouldn't be able to hold your 401(k) money hostage once it's clear that you are no longer working, and normally there would be no financial incentive for an employer to do so. But if you can't solve this problem by yourself, you will need to consult an employment or contract lawyer to help you.
Disclaimer: This site exists to provide information only. It is not legal advice. Answering your question does not create an attorney-client relationship. I am a Massachusetts lawyer. Any information provided on this site does not, except as explicitly stated, imply familiarity with laws or procedures peculiar to your state which may differ from those where I practice.
Contact the HR department and ask them to update your status with Fidelity on the 401k from LOA to Terminated. Fidelity cannot update their information until the employer feeds the status change to them. When you ask HR to update the status, ask them when they will update the information. For many employers they can update the status with Fidelity immediately. Some companies only do it by weekly feed. If the status does not update at Fidelity within a few days after HR said they would make the change then call Fidelity and ask them to contact the employer to get the status change. If the phone rep says he or she cannot do it then ask for a supervisor. It can be done, it just isn't always supposed to be done from Fidelity's end.
Submit your resignation and request that the employer change your status to terminated. You will likely be eligible for COBRA coverage and a distribution from your 401(k) Plan once your status has been changed. Keep in mind that coverage through the exchanges will likely be more affordable than COBRA coverage because you should qualify for a subsidy. Go to www.healthcare.gov to enroll in exchange based coverage.