This is a matter of IRS terminology, which we have to follow.
The reason that the code W amount is called "employer" contributions, is because whether the source of the contributions was from the employer or from payroll deduction by the employee, it is treated the same way.
That is, the code W amount is removed from Wages in boxes, 1, 3, and 5. This is how an HSA contribution (no matter who it is from) is a tax benefit - because it was never in your income at all.
So you see that code W contributions are not only not subject to federal income tax, but these code W contributions are not subject to Social Security taxes (box 3) nor Medicare taxes (box 5) .This is a clear benefit, because HSA contributions made directly to the HSA custodian (i.e., not through the employer) are subject to Social Security tax and Medicare tax,
Instead of "employer" contributions, just call it "A", and the direct HSA contributions as "B". Perhaps this will lessen your confusion.
I will repeat, whatever contributions dollars are in the code W amount MUST NOT be repeated in the personal contribution line. Don't worry, it's actually better for her this way, because she won't be double-dipping and won't have SS tax or Medicare tax on the code W amount.
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