Thanks so much for your time and the detailed explanation - it helps clear up a lot.
Regarding "It's important to understand that once you have money in an HSA, you can spend it tax-free for any qualified medical expenses, even if if the deposit was technically not allowed and subject to penalty.", Wow - so you are saying that I can add up all of my HSA-eligible expenses since the inception of the account until withdrawal (or is it end of year?) and that would reduce the total excess by that amount and subsequently the 20% penalty? Even though the contributions were made against an ineligible HDHP?
Also regarding the monthly interest earned on the contributions in the HSA account, do those get included in the excess amounts for 2021 and 2022 (and thus subject to the 6% excise) or are they reported as "Other Income" on a 1099? And how would they be reported for the 2023 withdrawal?
