The 1099-NEC is a new form.  It is correct to issue for a former employee FSA debit card.

Here is how to enter the 1099-NEC so that it does not appear as a business:

Federal
Wages and Income
1099-MISC and Other Common Income
Income from Form 1099-NEC

You will be asked to explain what the 1099-NEC was issued for.

I have entered this as you suggested but Turbo Tax is still processing a Schedule C & is asking for all the for items on the form....All related to a business (i.e. Accounting Method, Business Code, Business Name...}. 

This amount needs to be zero because I do have the receipts.  I did submit the receipts and I still have copies of them....They company would not allow them now.

If you have expense receipts showing that you spent the income reported, then you can enter those expenses as business expenses and they will cancel out the income so your net income will be zero. That should resolve your issue.