Costco to Sell Medicare Advantage Plans Through Partnership With SCAN Group

Costco Wholesale Corporation (COST) and the nonprofit insurer SCAN Group announced a partnership on Tuesday to sell Costco-branded Medicare plans, marking the retailer's first entry into the Medicare market. The move targets a customer base that has shifted decisively toward private coverage: more than half of the roughly 67 million Americans on Medicare are now enrolled in Medicare Advantage plans rather than traditional Medicare, according to federal data.

The companies plan to begin with Medicare Advantage products in two states and a Medicare supplement plan in a third, pending regulatory approval from the Medicare agency, according to the Wall Street Journal. The three target markets together include around five million Medicare enrollees, the Journal reported. The companies declined to name the states or disclose timing, citing restrictions on disclosure while the plans await agency approval. New Medicare Advantage plans generally take effect with the plan year that starts in January, and Medicare's annual enrollment period, which runs from October 15 to December 7, is the main window for existing beneficiaries to switch coverage.

Under the arrangement, Costco would market branded health insurance products for older adults. Covered services could encompass prescription drug access, Medflex over-the-counter benefits, vision care, and audiology, among other offerings, the companies said. The plans will be sold in Costco stores as well as through insurance agents and other standard channels; the retailer counts more than 70 million paid household members. Federal rules prohibit bundling a Costco membership with the health plans.

SCAN Group CEO Dr. Sachin H. Jain said the new Medicare Advantage plans would integrate closely with Costco's existing offerings across prescription drugs, vision, over-the-counter medications, food, and hearing products. "We are trying to create something that's incredibly simple for people to use that will enable them to seamlessly access their benefits," Dr. Jain said. SCAN, based in Long Beach, California, is a nonprofit insurer focused on older adults.

Costco CEO Ron Vachris said in a statement that the partnership extends the retailer's longstanding commitment to delivering value to its members. "We have developed a shared understanding of what matters most to the seniors we serve," Vachris said in the statement. "Deepening our partnership allows us to build on that foundation and create value for our members."

Richard Stephens, senior vice president for pharmacy at Costco, described the Medicare effort as 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," Stephens told the Wall Street Journal. He added that Costco members trust that the retailer has vetted what it sells, and that the company aims to apply that same standard to the new insurance product. Other major retailers have pursued healthcare with mixed results: Walmart closed its Walmart Health clinic network in 2024, while Amazon expanded into primary care with its acquisition of One Medical.

SCAN Health Plan's coverage footprint spans 33 counties across six states — California, Arizona, Nevada, Texas, New Mexico, and Washington — reaching close to 460,000 members. When affiliated programs and entities are included, the broader SCAN Group network reaches roughly 500,000 members and patients, the company said.

The partnership also comes as Medicare Advantage insurers grapple with elevated medical costs and changes to federal payment rules, pressures that led many carriers to trim benefits or exit certain markets heading into 2025. Even so, the underlying market keeps growing: the U.S. Census Bureau projects that all baby boomers will be 65 or older by 2030, continuing to feed Medicare enrollment.

The two companies declined to disclose the financial terms of the partnership.