You are correct that you are ineligible to contribute for all of 2025 because of your spouse's FSA.
You can spend the money already in the HSA if you have qualified medical expenses. The rules for spending are separate from the rules for contributing. If you can spend the money for qualified medical expenses before Dec 31, 2025, you will avoid any penalties.
You should stop any voluntary contributions ASAP. You should also tell your employer you are not eligible for their free matching contribution.
The ineligible contributions (both voluntary and employee) will be added to your taxable income at the end of the year, because they are not eligible for a tax-free contribution. However, there is no additional penalty for making the contributions.
If you have funds remaining in the account at the end of the year that you are unable to spend on qualified medical expenses you have two options:
A. leave them in the account and pay a 6% penalty. This might be a good choice if you plan to be HSA-eligible in the future (such as your wife declines the FSA for 2026) because you can apply the excess contriubiton from 2025 towards your 2026 limit.
B. remove the funds from the account by asking the bank for a "return of excess contributions". The returned contributions are not taxable again (because you lost the tax deduction for the contributions already) but you would have to report as taxable income, any interest you earned on the excess.
But, if you can use up the excess with qualified medical expenses, there won't be a 6% penalty because the penalty is charged on the amount of excess contribution or the remaining balance, whichever is less.
