HSA over contribution and distributions

[NECPA in NEBRASKA]

I am going nuts trying to figure out form 8889 for a client. Their employer contributed the max $6,250 to their HSA and they put in $1.310. The 5498-SA has $7,560 in box 2. The bank did not tell them that they had contributed too much and they used more for medical expenses. The 1099-SA says $7,583.24, category 1. I think that there should be a penalty, but I can not get the 8889 to show that they contributed too much, because it says to not include employer contributions on line 2 and it doesn't seem to add the employee and employer contributions together anywhere. There was only $5.72 left in the account at year.

Am I totally misunderstanding the instructions?

Thanks!