Thanks for the info! I have moved the chalice into the sand...
I went to the LFS earlier and one of the employees said it was black band disease but there wasn't any sort of black band on the edge of the white spot...
Another employee said that it could have been stung by a coral or that the alkalinity was off, similar to what was said here.
Either way, I am keeping it as far away from the frogspawn it was next to (~3.5" away originally) as I can in my 12 gallon tank... Also did a 4-gallon WC using red sea coral pro... Going to bring a water sample to the LFS tomorrow for testing (they do full-range salifert testing for $2.50...) and they also said they'd frag the chalice for free..
If it wasn't water quality, could it have been another animal? I added 4 scarlet-legged hermits a week ago and have seen them on top of the plate picking away... not sure if at the dead or healthy tissue. I didn't think that they were coral eaters.