Aha! This is a very little known feature of TurboTax. When you enter a 1099-SA for qualified medical expenses, TurboTax creates an entry that subtracts this amount from expenses you have entered into Schedule A.
To deal with this, you enter a miscellaneous medical expenses in your Schedule A, where the description is "HSA adjustment", and the amount is equal to the total of the 1099-SA amounts for qualified medical expenses. When you go through the Schedule A interview, you may see a screen that refers to this, although it may not have meant much at the time.
OK, so after you have done this and after you have gone back and set the 1099-SA distribution to what it should be, please review your Schedule A.
Sorry to have not caught this, but it getting rarer and rarer that someone both has an HSA and enough medical expenses to exceed the 7.5% limit for medical expense and is also able to beat the Standard Deduction.
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