I found there is more to this answer. I was taxed on the W-2 Box 12 HSA contributions till I did "all" of the following steps:
1) Enter an amount on the Wages & Income W2 Box 12 (getting taxed for the full amount of your HSA contribution)
2) Then under deductions & credits: Enter your 1099-SA and claim money spent in box 1 was only for medical expenses. (This won't change that you've been taxed for your contribution)
2) Continue following turbo tax deductions & credits till it asks about your High Deductible Health Plan (HDHP). For the HSA contribution to be tax free, you also have to be enrolled in an HDHP. When you answer "yes" to being enrolled in an HDHP the taxed amount on Box 12 will be removed.
Hope that helps those still struggling with this issue as I was.
Bryan
