Costco Enters Medicare Advantage With SCAN, Targeting 5M Seniors

Costco is preparing to enter the $500 billion Medicare Advantage market through a proposed partnership with nonprofit insurer SCAN Health Plan, pending federal approval from the Centers for Medicare & Medicaid Services.

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

The initial rollout is a limited pilot: co-branded Medicare Advantage plans in two states and a Medicare Supplement (Medigap) plan in a third, reaching an estimated 5 million Medicare-eligible enrollees. SCAN serves nearly 460,000 members across 33 counties in six states — California, Arizona, Nevada, Texas, New Mexico and Washington. Plans will be sold online, through insurance-licensed brokers and inside participating Costco warehouses, and enrollees do not need a paid Costco membership.

The partnership extends Costco's broader healthcare push, which already includes discounted prescription drug pricing through the Costco Member Prescription Program and virtual doctor visits via Sesame. With 63 percent of Costco customers being Gen X or baby boomers, the retailer is treating senior health services as a natural extension of its membership ecosystem.

"For more than 40 years, Costco has consistently listened to our Members and earned their trust delivering consistent value on essential goods and expanding our health service offerings," Costco CEO Ron Vachris said. "Selecting SCAN as our partner to deliver a better healthcare experience for seniors is an extension of that commitment."

A Retail Playbook Meets a $500 Billion Program

Medicare Advantage has become a dominant force in U.S. healthcare. An estimated 35 million Americans were enrolled in a Medicare Advantage plan as of earlier this year, according to KFF, drawn by benefits beyond original Medicare — dental, vision, hearing and fitness club memberships — plus caps on annual out-of-pocket spending. The program's scale has made it a magnet for new entrants, with total federal spending on Medicare Advantage projected to exceed $500 billion annually.

Costco's entry applies its core retail playbook: simplify a complicated consumer decision and emphasize value. The company is not becoming an insurer overnight — SCAN brings the insurance expertise, while Costco contributes its brand, customer relationships and physical locations. The companies are exploring integration with Costco's existing pharmacy, optical and hearing center services, along with over-the-counter benefits.

The timing is notable. Medicare Advantage enrollment has grown by roughly 1 million people annually in recent years, driven largely by special needs plans, according to KFF. The last major retail-branded healthcare push — Amazon's $3.9 billion acquisition of One Medical in 2022 — showed that consumer-facing companies see healthcare as a growth frontier, though Amazon has since scaled back parts of its primary care ambitions. Costco's approach differs: rather than building a healthcare delivery network, it is partnering with an established insurer and leveraging its existing physical footprint.

What Seniors Should Watch

For retirees in the pilot states, the Costco-SCAN plans add a new comparison option. But brand loyalty should not replace a thorough side-by-side review of plans. Until official pricing and local network details are released, the smartest move is to review current drug and doctor coverage and wait to see whether the actual savings live up to the Kirkland name.

For existing Medicare Advantage carriers, a retail entrant with Costco's brand recognition could pressure pricing and member incentives. The warehouse club's membership model — built on fee revenue and repeat visits — gives it a structural advantage in customer retention that traditional insurers lack. Costco's 63 percent share of Gen X and baby boomer customers means the retailer already has deep relationships with the demographic most likely to enroll in Medicare Advantage.

The partnership is still in its early stages, and exact markets and timing remain to be determined pending CMS approval. If the pilot succeeds, expansion into additional states would follow, potentially reshaping how millions of seniors shop for healthcare coverage. For now, the key question is whether Costco can translate its reputation for value into a healthcare product that delivers measurable savings — and whether seniors will trust the Kirkland brand with their medical coverage.

This article is for informational purposes only and does not constitute investment advice.