I am being informed all HSAs are not covered by Reg E because they are considered a trust or custodial account. However,if you look at the Reg E commentary to 205.2(b)(3)it says; trust agreements are not defined by the act or regulation and therefore, financial institutions must look to state or other applicalbe law for interpretation. If trust are defined by applicable state laws, how can this non "blanket" coverage occur?

It is not a true trust account, but a custodial account defined by the IRS. The commentary here addresses it:

Paragraph 2(b)(2)

2. Custodial agreements. An account held under a custodial agreement that qualifies as a trust under the Internal Revenue Code, such as an individual retirement account, is considered to be held under a trust agreement for purposes of Regulation E.