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Costco members are accustomed to finding groceries, eyeglasses, prescriptions, and even travel services under one warehouse roof. Now the retailer is moving deeper into healthcare through its first comprehensive partnership with a Medicare plan. Costco and nonprofit insurer SCAN Health Plan plan to introduce co-branded insurance products for older adults, potentially putting a familiar retail name in front of consumers making one of their more complicated healthcare decisions.
The Rollout Will Start Small
The partnership is expected to begin with co-branded Medicare Advantage plans in two states and a Medicare supplement plan in a third, although the three states have not been publicly identified. The initial markets encompass roughly 5 million Medicare enrollees, and the products still require regulatory review and approval. Plans are expected to be available through Costco stores as well as insurance agents and websites, but the companies have not announced exactly when sales will begin.
Medicare Advantage Is Already A Huge Business
Medicare Advantage is the private-insurance alternative to traditional Medicare and accounts for more than half of the overall Medicare market. SCAN already operates Medicare Advantage plans across Arizona, California, Nevada, New Mexico, Texas and Washington, with its service area covering 33 counties. The Costco arrangement gives the nonprofit insurer a distribution partner whose name is considerably better known among consumers, particularly as seniors navigate a market filled with competing insurers and plan options.
Costco’s Biggest Contribution May Be Trust
SCAN CEO Sachin Jain has framed Costco’s reputation as central to the partnership, arguing that members expect products carrying the retailer’s name to have been screened for quality and value. “Costco has built something exceedingly rare: trust at scale,” Jain wrote in announcing the agreement. Brookings Institution senior fellow Matthew Fiedler said SCAN clearly stands to gain from the association because Costco is a household name and a brand many consumers already view favorably.
The Plans Could Extend Beyond Medical Coverage
The companies envision a broader collection of senior-focused benefits rather than a narrowly defined insurance product. Pending regulatory approval, offerings could include pharmacy benefits, Medflex over-the-counter benefits, vision coverage, and audiology or hearing services. Jain has said the products are being designed around Costco so older adults can use benefits at retailers where they already shop instead of being directed toward unfamiliar vendors.
Medicare Supplement Coverage Works Differently
Not everything planned under the partnership falls under Medicare Advantage. Costco and SCAN also intend to offer a Medicare supplement policy, commonly known as Medigap, which is private insurance used alongside traditional Medicare to help pay expenses such as copayments, coinsurance and deductibles. That distinction gives the partnership a potential foothold among seniors who choose traditional Medicare as well as those who obtain their Medicare benefits through a private Medicare Advantage insurer.
A Costco Membership Is Not Part Of The Insurance
The co-branded Medicare Advantage product itself will not include a Costco membership, according to reporting cited by MarketWatch. That separation is important because the arrangement is not simply another warehouse-club perk bundled into an annual membership. Costco is instead lending its brand and retail presence to insurance products administered through SCAN, although the companies have not publicly disclosed the financial terms of their agreement.
Costco Could Benefit From Each Enrollment
Fiedler said the undisclosed financial arrangement makes it difficult to determine precisely what Costco receives, but he suspects the retailer could earn a commission or similar payment for policies it helps sell. Such compensation would not be unusual in Medicare Advantage, where insurers commonly pay commissions to brokers who enroll beneficiaries. Consumer brands have entered similar arrangements before: UnitedHealthcare sells co-branded Medicare Advantage products with AARP, while an earlier UnitedHealthcare partnership with Walmart ended two years ago.
The Expansion Comes At A Difficult Time For Insurers
Costco and SCAN are entering this partnership while other Medicare Advantage insurers have been pulling back from some markets and reducing benefits as they contend with rising healthcare costs. Prescription expenses are particularly important for older adults living on fixed incomes, and the Centers for Medicare and Medicaid Services recently ended a temporary program that had helped restrain monthly premiums for Medicare Part D prescription-drug plans. Against that backdrop, SCAN says its Costco initiative is intended to address the “disjointed experience” many seniors encounter while trying to access care and services.
Regulatory Approval Will Determine What Comes Next
The partnership is designed to grow into a suite of senior-focused insurance products over the coming years, but its first offerings must clear regulatory review before consumers can enroll. The unanswered details include which states will receive the initial plans, when enrollment will begin, and exactly how pharmacy, vision, hearing, and other benefits will work. If the rollout proceeds, Costco’s experiment will test whether the loyalty it built selling everyday goods can translate into something much more complex: helping older Americans choose and use health insurance.