"However, they are saying they have no way to manipulate the form 1099-SA to show my 2021 amount as a normal distribution (with Code 1 in Box 3) directly, and that it would need to be done either by me using the HSA debit card or by a reimbursement."
Right. They should be making a regular distribution of $475.01 paid to you as if you were reimbursing yourself for qualified medical expenses that you had previously paid using other funds. (Some HSA custodians charge a nominal fee for reimbursement distributions, sometimes depending on whether or not they need to issue a check for the purpose.) You'll then make it taxable, thus eliminating this excess from the HSA, by treating the $475.01 on your 2023 Form 8889 as not used for qualified medical expenses. That's exactly how it's supposed to be done. This distribution will be combined on a 2023 Form 1099-SA that also reports other distributions made in 2023 that are used for qualified medical expenses.
