The early withdrawal penalty tax does not apply to a distribution used to pay medical expenses in excess of 7-1/2% of AGI. If an accountholder is married, filing jointly, can the distribution avoid the penalty if it is used to pay medical expenses for the spouse? children?

The exception in 72(t) references Code Section 213. I have always interpreted it as the expenses that would be deductible on the IRA owner's Form 1040; those would include expenses of a spouse and dependent children. The total must be deductible (in excess of the 7.5% floor) whether they itemize deductions or not.