For this as a code-1 distribution to be able to correct the excess, you must indicate that it was not used for medical expenses, subjecting the distribution to ordinary income tax and a 20% penalty. By making it taxable, TurboTax will include the $20 on Form 8889 line 16 and on Form 5329 line 44.
By not treating this as a code-2 return of excess contribution, the excess for 2020 was not cured and your 2020 Form 5329 must show this excess contribution on line 48
Between the two tax years you'll have penalties of $1 + $4 and ordinary income tax on $20, probably cheap enough to make it not worth the effort to fight the HSA company. (The $1 excess contribution penalty for 2020 not reported can probably be considered to be a de minimis error and be ignored. It's doubtful that the IRS would come after you for $1.)
