This excess contribution can only be corrected by reporting a taxable HSA distribution equal to the amount of the excess. This means receiving a code-1 Form 1099-SA that shows at least the amount of the excess and indicating that the amount used for qualified medical expenses is only the amount on the Form 1099-SA that exceeds the amount of the excess.
The HSA custodian has messed up by treating this as a return of contribution before the due date of your 2020 tax return since the distribution was made long after that. A 2022 Form 1099-SA with code 2 is only permitted when correcting an excess contribution made for 2021or 2022, not for an excess contribution made for 2021. I suggest contacting the HSA custodian to inform them of their error and to obtain a corrected 2022 Form 1099-SA showing a $0 code-2 distribution and another 2022 Form 1099-SA showing this amount distributed as a regular distribution with code 1.
