If the Form 1099-SA will report as the gross amount the amount before subtracting the $25 fee, your husband needs to add $25 from another source to make up the difference and roll over the entire distribution, otherwise the $25 will be treated as distributed but not rolled over. Alternatively he could roll over the net amount and apply the $25 to any unreimbursed medical expense incurred after the date on which the original HSA was established. If the $25 is not rolled over and is not applied to a qualified medical expense, the $25 will be subject to tax and, if your husband was under age 65 at the time of the distribution, to a 20% ($5) additional tax.
