While an amount contributed but not also deducted isn't taxable, it doesn't stop there. There is excise tax as penalty and applies to each tax year the excess contribution remains in the account. That means going back to 2018 and working forward. You also need to take earnings into consideration, so there might be taxable income as well as penalty.

"Assumed about one half of $7595 was from from 2018 ($6900/2=3450) contribution not deducted ( they only deducted half on 2018 return)"

So, they were covered that year, but put in too much? Or, were not qualified at all, that year, and any later year? Don't make an assumption; use the forms and statements to see each year's amounts.

The 20% penalty for taking HSA funds for a non-HSA purpose doesn't apply to a corrective distribution.

It seems you have some research to do, and some more math to do.