@x0bkhawk
I am glad, Bryan, that you see how the HSA works.
One of the things that most confuses taxpayers is that when you have the "employer" contribution (that is, what your employer contributes AND what you contribute through payroll deduction), this amount is removed from Wages in Boxes 1, 3, and 5 before your W-2 is printed. This amount appears in Box 12 of your W-2 with a code of W.
You can't tell from looking at the W-2 if the employer has removed the HSA amount, but this is why the HSA is a tax benefit - because the HSA contribution was never in your income in the first place.
And this is the reason you see your refund drop when the code W amount is entered into TurboTax - that amount that had been removed from Wages has to be added back per the IRS until you certify that you had the proper HDHP coverage, which you do in the HSA interview.
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