Unfortunately, you will not be able to keep the HSA funds.
The rules for a health FSA state that both the employee and employee's spouse are covered, and unlike a normal insurance policy, the spouse cannot opt out of the FSA coverage.
Therefore, because the FSA is conflicting coverage, the HDHP coverage is disallowed for HSA purposes.
In your case, you will indicate that you have an HSA (if there is a code W in box 12 of your W-2, TurboTax will know this as soon as you enter your W-2).
In the HSA interview (under Deductions & Credits->Medical->HSA, MSA), you will indicate that you did not have HDHP coverage for any month of the year. That is, even though you had HDHP coverage for insurance purposes, you did not for tax purpose because of the conflicting FSA coverage).
After this, TurboTax will tell you that you have an excess HSA contribution of $7,100, and ask you if you want to withdraw it by April 15, 2021. If you have the whole amount in the HSA, then answer "yes". If this was the code W amount on the W-2, then this excess amount will be added to line 8 (Other Income) on Schedule 1 (1040) automatically.
Then you must by April 15th contact your HSA custodian and ask for a withdrawal of excess contributions (use this phrase) and tell them the $7,100 - let them calculate the earnings (if any). Note that they may have a form on their website to do it online.
When you have done this, there will be no penalty and you will be done with it.
If you cannot withdraw the entire $7,100, then withdraw as much as you can, because the remaining amount will be carried over to 2021 and you will be penalized 6% for each year that this happens.
I am sure you have more questions, but does this make sense so far?
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