Let me try restating this: "The owner made an HSA contribution which was included in the W2."

The Employer made a contribution to the Employee's HSA, which is already on the W2 and part of the payroll and benefits values for the corporation. It isn't part of the S Corp, now. And for the individual taxpayer, it's already on the W2. It doesn't go on the K-1; it's on the W2 for that employee.

This assumes they did this properly for an employee benefit provision.

(edited; oh, I see where I left a conflicting statement)