Costco to Sell Medicare Advantage Plans With SCAN Group, Starting in Two States

Costco wants to sell you a rotisserie chicken, a 96-pack of paper towels, and now, your Medicare plan.

The retailer announced Tuesday it's teaming up with SCAN Group, a nonprofit Medicare insurer based in Long Beach, California, to sell jointly branded Medicare Advantage plans and a Medicare supplement product, according to the Wall Street Journal. It's Costco's first real push into the Medicare market.

The rollout starts small. Medicare Advantage plans will launch in two states, with a Medicare supplement (Medigap) plan in a third, once the Centers for Medicare and Medicaid Services signs off. Costco and SCAN haven't named the states, citing disclosure restrictions while regulatory approval is pending, per the Journal. Together those three markets hold about 5 million Medicare enrollees.

SCAN already operates in six states: California, Arizona, Nevada, Texas, New Mexico, and Washington, covering close to 460,000 members. The Independent points out that three of those states—California, Texas, and Washington—are home to 35% of all Costco stores, a decent clue about where this pilot might land first.

What's actually being sold

This isn't a Costco membership perk. Federal rules block insurers from bundling Medicare coverage with retail memberships, so nobody's getting a health plan for the price of a hot dog and a Kirkland membership card.

Instead, the plans will be sold in Costco stores, through insurance agents, and via standard enrollment channels. Coverage could include prescription drug access, over-the-counter Medflex benefits, vision, and audiology, according to Coverager, an insurance industry trade outlet.

SCAN CEO Dr. Sachin Jain framed it as extending trust seniors already have in Costco to a market where trust is in short supply. "Costco has built something exceedingly rare: trust at scale," Jain told MarketWatch. "That is exactly the kind of trust healthcare desperately needs."

Costco CEO Ron Vachris said the partnership builds on "a shared understanding of what matters most to the seniors we serve." Richard Stephens, Costco's senior vice president for pharmacy, called it a pilot. "We plan to learn a lot from it, and we plan to make sure that we have the right product for our members," he told the Journal.

The timing isn't neutral

This launch comes right after CMS announced it's ending a temporary subsidy program that had been propping up Medicare Part D premiums.

Dr. Mehmet Oz, the CMS administrator, announced on July 28 that the agency is killing the Part D Premium Stabilization Demonstration a year early, calling it a bailout for insurance companies that cost taxpayers $9.8 billion over two years, according to the Epoch Times. The program was originally scheduled to run through December 2027.

That subsidy had kept a lid on premium spikes tied to Inflation Reduction Act changes, like the $2,000 out-of-pocket cap on drug costs and the $35 insulin cap, according to a Government Accountability Office report cited by the Epoch Times. Premiums actually dropped $3 a month on average under the subsidy, per MedPAC data, and Part D enrollment grew 10% over two years, according to KFF.

Oz's position, that the market has stabilized enough to end the training wheels, is a defensible call if the numbers back it up. But critics worried about the fallout have a fair point too. About 25 million beneficiaries have Part D coverage, according to KFF, and many of them may not even realize they benefited from a subsidy that was paid directly to insurers rather than showing up as a line item on their bill. If premiums jump in 2027 the way they were projected to before the subsidy existed—when KFF says a 42% spike was on the table—seniors could feel real financial pain at the exact moment Costco is asking them to trust a brand-new insurance product.

A crowded, and now riskier, market

Medicare Advantage already covers more than half of all Medicare enrollees, per MarketWatch, and it's a market where several major insurers have been cutting benefits and pulling out of counties to control costs. Costco's entry, alongside Walmart's separate Medicare initiative launched in June offering pharmacist consultations through Sam's Club, signals big retail sees an opening as legacy insurers retreat.

Neither Sam's Club nor BJ's currently sell Medicare plans outright, according to the Independent, leaving Costco as the first major warehouse chain to go all-in on branded coverage.

There's also a security wrinkle worth flagging separately. Fox News has reported that scammers are increasingly exploiting Medicare-adjacent touchpoints: fake QR codes at medical offices, phony Medicare mailers, texts about prescriptions to steal personal data. As more brand names attach themselves to Medicare products, seniors will have more official-looking mail and messaging to sort through, legitimate and fraudulent alike.

The unresolved question is simple: which two states get Costco-SCAN Medicare Advantage plans first, and when will CMS actually approve them. Neither company has disclosed this, and approval timing depends entirely on federal regulators who haven't set a public deadline.