Because only HSA-eligible individuals are permitted to open an HSA, if you were never an HSA-eligible individual, the account that you opened does not qualify as an HSA; no HSA exists. (IRS Notice 2008-59 Q&A-23) If this is your situation, the HSA administrator has a special procedure for dealing with this, so contact the HSA administrator and explain that you were never an HSA-eligible individual.
Because the account never qualified as an HSA and no HSA exists, the deposit did not constitute an HSA contribution. Because the deposit did not qualify as an HSA contribution, you are not subject to any excess contribution penalties. You must amend your 2016 tax return to remove the reported HSA contribution and include income the amount deposited, either by removing the deduction on Form 1040 line 25 or, if the contribution was through your employer and reported with code W in box 12 of your W-2, by including the amount deposited as miscellaneous income on Form 1040 line 21.
The special procedure followed by the HSA custodian will likely treat the account as a regular savings account. If there has been any gain in investment value, you'll likely be subject to income tax on the gain.
