Has anyone got experience using Health Saving Account debit card to pay for health care provider and when insurance paid the balance and got a refund in the same HSA account electronically. Is the partial money refunded (paid by insurance) considered toward contribution or will it be taxed in addition to 20% penalty?

Any suggestion on how to handle this refund will be highly appreciated.

I was not in that situation but I personally think just report your expenses from the report you get in the mail (forgot the name of the paper 1099-SA or something) and don't take out any money from HSA account for personal uses other than Health related expenses with receipt Good luck.

https://ttlc.intuit.com/community/taxes/discussion/my-hsa-paid-for-the-full-dental-charge-my-insurance-covered-a-portion-and-sent-me-a-check-do-i-need/00/302464

Don't pay through HSA. HSA is a great tool to build wealth. Pay through your credit card.

Agree with sajhamitra's suggestion. If possible always pay using your credit card. Let your money in the HSA grow tax free. Save your receipts for all the medical expenses and you can always reimburse yourself in the future whenever you need it.

Bonus: You get some points when you pay using your credit card.

Exactly @Nepali, I am shocked many don't know about it and it's greatest wealth building tool. People can definitely save thousands if not 10s of thousands if done right.