Costco to Offer Medicare Advantage Plans: What Shoppers Should Know

With Costco's announcement that it will soon offer Medicare Advantage plans to club members, one question consumers are likely to ask is: Will I get "warehouse club pricing"?

Medicare plans are difficult enough to shop for. Benefits vary and can be confusing, costs are multilayered, and shoppers must factor in doctor and hospital network availability. Buying a plan from a trusted source like Costco (COST) may seem appealing — but what should shoppers really consider?

'Healthcare that is easier to navigate'

Costco hasn't rolled out its Medicare plans just yet. The partnership with SCAN Group, a not-for-profit plan provider operating in just about half a dozen states, was announced this week and is pending regulatory approval. SCAN, founded in 1977 and based in Long Beach, California, has long specialized in insurance and services for older adults.

It also isn't Costco's first step into insurance sales. The retailer partnered with startup insurer Oscar Health in 2016 to sell individual marketplace plans in select markets, an arrangement that was later discontinued.

The rollout will be limited to select markets. Initially, Costco is expected to offer Medicare Advantage plans in just two states and a Medicare supplement plan in just one, according to a Wall Street Journal report.

"Older adults want healthcare that is easier to navigate, more responsive to their needs and rooted in organizations they trust," Dr. Sachin H. Jain, CEO of SCAN Group, said in a release.

If Costco is launching a Medicare service, can other warehouse clubs such as BJ's or Sam's Club be far behind — and what about Amazon? None of those retailers have yet announced plans to follow Costco's lead. Amazon, which continues to expand its Amazon One Medical service with pharmacy, on-demand medical care, and other health benefits, could be a likely candidate to enter the space, though the company has not signaled any specific plans to do so. The broader retail sector's record in healthcare has been mixed: Walmart closed its Walmart Health centers and wound down its Medicare insurance brokerage in 2024, and Walgreens has scaled back its VillageMD clinic business, even as CVS Health built out a large healthcare arm around its 2018 acquisition of insurer Aetna.

What is a Medicare Advantage plan?

Medicare Advantage has become the default route into Medicare for many older Americans: more than 30 million people, or more than half of eligible beneficiaries, are enrolled in the private plans, according to the Centers for Medicare & Medicaid Services.

Medicare is government-sponsored healthcare insurance generally available to U.S. citizens 65 and over, and it is not free of cost to enrollees. Details on Medicare costs are available at Medicare.gov.

Original Medicare offers hospital and medical insurance (Part A and B), with prescription drug coverage (Part D) available either through Medicare or from an independent provider. Original Medicare has no limit on out-of-pocket expenses.

A Medicare supplement plan (Plan G or K) is optional and helps cover out-of-pocket costs that are not covered by the three parts of Original Medicare.

Medicare Advantage (Part C) is another option that often combines the three original plans into one and can include additional benefits not typically covered by Original Medicare, along with a limit on out-of-pocket expenses.

How to shop for a Medicare Advantage plan

Danielle Kunkle Roberts, author of "10 Costly Medicare Mistakes You Can't Afford to Make," calls the Costco Medicare plan announcement "an interesting move."

"Having a well-known retail organization like Costco coordinating the insurer, pharmacy, and potential added benefits like hearing benefits or prescription savings is convenient and may mean fewer network surprises or billing issues," Kunkle Roberts told Yahoo Finance by email.

However, she cautioned: "Convenience doesn't always mean the best deal, though."

Kunkle Roberts noted that Medicare Advantage plans from any insurance carrier are federally regulated insurance and don't include "warehouse club pricing."

Star Ratings are the federal government's annual one-to-five-star quality grades for Medicare Advantage and drug plans.

"Shoppers should still check Star Ratings, confirm their doctors are in network, and compare total costs before enrolling," she said.

The National Council on Aging suggests asking these four questions before choosing a plan:

1. Will you be able to choose your doctors?
2. Will you have coverage while traveling?
3. Will your current prescriptions be covered?
4. What will the out-of-pocket expenses be?

Shoppers also have a fixed window to act: Medicare's annual enrollment period, when beneficiaries can join or switch Advantage and drug plans, runs October 15 through December 7 each year. For Costco's plans specifically, the open questions — assuming regulators approve the launch — are which markets are included and how their networks, benefits, and total costs compare with plans already available locally.

Consumers can compare Advantage and supplemental plans available in their area by using the Medicare Plan comparison tool.