As I understand it, California basically reverses the federal rules for HSAs: in California, contributions are not deductible and distributions are deductible. This is not the same as deducting expenses that have not been reimbursed by insurance or HSA.
https://www.irs.gov/publications/p969
Contributions, other than employer contributions, are deductible on the eligible individual’s return whether or not the individual itemizes deductions. Employer contributions aren’t included in income. Distributions from an HSA that are used to pay qualified medical expenses aren’t taxed.
https://www.ftb.ca.gov/forms/2024/2024-540-ca-instructions.html
HSA distributions – If you received a tax-free HSA distribution for qualified medical expenses, enter the qualified expenses paid that exceed 7.5% of federal AGI on line 4, column C.
