You will be assessed the 6% penalty for 2023 on the excess amount. This amount will carry over to 2024 as a personal contribution. The excess amount will be added to Other Income on your 2023 return.
The same will happen on your 2024 return.
As I said, the 6% penalty on the carryover of excess HSA contributions is 6% of the LESSER of the carryover amount OR the value of your HSA at the end of the year. For 2024 the value of your HSA will be reported in box 5 of your 5498-SA.
Once you have spent your HSA down to zero, then there will be no penalty.
The IRS has not addressed the situation of having both spouses on Medicare so they will never be able to contribute to an HSA again, yet they have no cash in the HSA but have a carryover amount to apply to their contributions. It is a situation that you cannot fix.
In theory, you would be required to add form 8889 to your return every year, just to show that you have the carry over but cannot do anything about it. I suspect that most taxpayers will stop reporting the 8889 in this case.
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