HSA Contributions counted as untaxed income
This is from the 2012-13 Federal Student Aid Handbook:
Health savings accounts
Health savings accounts (HSAs) resemble tax-deferred pension and savings plans more than flexible spending arrangements; for example, the balance in an HSA persists from year to year, while that in a flexible spending arrangement must be spent on qualified expenses by the end of the year. Therefore, treat tax free contributions to an HSA as untaxed income; these will appear on line 25 of the 2011 IRS Form 1040. The balance in the account does not count as an asset, nor would distributions from it count as untaxed income when they are used for qualified medical expenses. Distributions not used for qualified expenses are subject to income tax (and a possible penalty) and will be counted in the adjusted gross income.
This is a new clarification.