We took any early withdrawl (in 2008) of a portion of our 403b to pay medical expenses that occurred in 2005 but we are still paying on them. Even though we claimed them as a deduction in 2005, can I still claim them as medical expenses being paid now to avoid being penalized? Or do the medical expenses have to occur the same year as the early withdrawl?

If I understand your question correctly - your early withdrawal from your 403(b) can be taken without having to pay the normal 10% penalty to the extent that the distribution was used to pay medical expenses in 2008 in excess of 7.5% of your 2008 AGI. What's important is that you paid the expense in 2008, even though you incurred the expense in 2005. You should file form 5329 with your return to document that you are not subject to the penalty because you used the distribution for medical expenses in excess of 7.5% of your AGI.