You can own and use an HSA for medical expenses tax-free even if you are not eligible to contribute.
Turbotax will ask when you enter the 1099-SA form if the entire distribution amount was used for medical expenses. When you click no, Turbotax will ask for the amounts of qualified medical and non-qualified distribution and you pay income tax plus a 20% penalty on the non-qualified part. So, you're going to lose half the money to taxes if you pull it out for non-medical expenses.
