It’s easy to think of Costco as the place where you go for giant jars of mayonnaise, bulk toilet paper, and the legendary $1.50 hot dog combo. But soon, millions of older Americans might be adding something far more significant to their Costco cart: their Medicare coverage. The retail giant is preparing to step into the health insurance world through a partnership with SCAN Group, a California-based insurer that runs Medicare Advantage plans across several states. This isn’t a full national launch by any means, at least not yet. Costco is planning a limited rollout that would offer jointly branded Medicare Advantage plans in two states and a Medicare supplement plan in a third, and even that is contingent on approval from federal Medicare regulators. The locations have not been disclosed, but together those three markets include roughly five million Medicare enrollees. That may sound like a lot, but it’s a tiny slice of the more than 70 million Americans currently on Medicare. Still, the news matters because it shows how major consumer brands are seeing healthcare as an extension of the loyalty and trust they’ve already earned—and because Medicare decisions are among the most consequential and confusing financial choices older adults face.
For anyone who has ever watched a parent or grandparent try to sort through Medicare options, the appeal here is obvious. Medicare coverage is not a single, simple thing. Beneficiaries have to choose between Original Medicare, Medicare Advantage plans, Part D prescription drug plans, and supplemental coverage like Medigap, each with its own costs, rules, networks, and enrollment periods. As of April, about 70.3 million people were enrolled in Medicare, and according to CMS, just over half were in Medicare Advantage or other private health plans, while more than 80 percent had Part D coverage. That’s a lot of people wrestling with a lot of decisions. Costco’s entrance into this space is essentially an attempt to make those choices feel a little less overwhelming. The company is partnering with SCAN Group, which is based in Long Beach, California, and already has about 560,000 members with Medicare Advantage plans in Arizona, Nevada, New Mexico, Texas, and Washington state. The new Costco-branded products would be sold through Costco stores, insurance agents, and online. One important catch: these plans won’t come with a free or discounted Costco membership, because federal rules prohibit that kind of arrangement. So you won’t be getting a gold-star executive membership just for signing up for a plan, but the broader promise is that Costco’s reputation for curated value will carry over to health insurance.
To understand what Costco is actually doing, it helps to separate the different kinds of coverage. The new products would fall into two broad categories. First, Medicare Advantage plans, which are private insurance approved by Medicare that bundle Part A and Part B benefits, often include Part D prescription drug coverage, and sometimes add extras like dental, vision, hearing, over-the-counter medications, and even food allowances. These plans typically require you to use doctors and hospitals within a network and may require prior authorization for certain services. Second, Medicare Supplement Insurance, or Medigap, which works alongside Original Medicare to help pay for out-of-pocket costs like deductibles, copayments, and coinsurance. The two types of coverage are very different, and the choice between them is one of the biggest decisions a Medicare beneficiary will make. Costco and SCAN haven’t released specific premiums, deductibles, provider networks, or benefit details yet, and they haven’t said exactly which states will be included. What they have said is that the Medicare Advantage plans would integrate with Costco’s existing offerings, including prescription drugs, vision, over-the-counter products, food, and hearing. That suggests the company is trying to bring its warehouse-club mentality to health coverage: instead of endless confusing insurance jargon, you get a straightforward product that taps into things you already know and use.
Why would someone buy Medicare through Costco instead of going directly to a traditional insurer or using a broker? The honest answer is trust and simplicity. Costco has spent decades building a loyal customer base around the idea that if the company puts its name on something, it has been vetted. Richard Stephens, Costco’s senior vice president for pharmacy, told the Wall Street Journal that members know if they buy something from Costco, it has been checked out and considered the best thing in its category. He said that’s exactly what they’re trying to do with this Medicare product. When you’re an older adult facing a mountain of plan brochures, conflicting advice, and fear of making a costly mistake, the idea of buying coverage from a familiar brand can be deeply reassuring. It’s the same reason people buy tires, eyeglasses, and even caskets from Costco—it feels safer and less fraught than navigating a market you don’t fully understand. Costco already has a Medicare marketplace through a partner called Custom Benefit Consultants, which lets members compare available Medicare Advantage, Medigap, and Part D plans in states like Arizona, California, Florida, Georgia, Illinois, Michigan, Minnesota, Montana, Nevada, Oregon, Texas, Washington, and Ohio. But that existing marketplace is not the same as the new Costco-branded SCAN plans. The new plans would be a deeper, more explicit partnership, with Costco’s name directly on the insurance product itself.
This launch comes at a particularly complicated moment for Medicare Advantage. On the one hand, enrollment has grown dramatically over the past two decades. KFF reports that just over 35 million people were enrolled in Medicare Advantage as of February 2026, an increase of 1.1 million from the previous year, and more than half of all eligible Medicare beneficiaries are now in private plans. But the pace of growth slowed in 2026, and the industry is under intense pressure from rising medical costs, provider network complaints, and scrutiny over coverage denials. Medicare Advantage plans have long been criticized for using prior authorization and other tools to delay or deny care, and federal regulators have started cracking down. CMS finalized a 2026 rule that includes changes to both Medicare Advantage and Part D, including steps to close appeals loopholes and make sure that certain adverse decisions are subject to appeal and notification requirements. That backdrop matters for anyone considering a Costco-branded plan. A well-known and trusted retailer can bring nice branding and customer service expectations, but the underlying insurance product is still a private Medicare Advantage plan, which means it will have its own network, its own rules, and its own prior authorization processes. In other words, just because Costco is attached to it doesn’t mean it will be free of the frustrations that have plagued Medicare Advantage as a whole.
For consumers, the most important takeaway is straightforward, even if the Medicare system is not: don’t sign up for a Costco-branded plan just because you love the store. Before enrolling in any Medicare Advantage or Medigap plan, you need to check whether your doctors and hospitals are in network, whether your prescriptions are on the formulary, whether Costco pharmacies are preferred or standard, what your deductibles and copays will be, what the annual out-of-pocket maximum is, and whether the extra benefits like dental, vision, hearing, or over-the-counter allowances actually matter to you. You should also think about travel coverage, because Medicare Advantage plans often have limited service areas, and if you spend part of the year somewhere else, your coverage might not follow you. Prior authorization rules matter too, because some services require approval before they’re covered, and that can mean delays. And you should look at the plan’s star ratings, which measure quality and member experience. Medicare open enrollment typically runs from October 15 to December 7 each year, so if Costco’s products get approved in time for a future enrollment window, eligible beneficiaries in the selected markets will be able to compare them side by side with other plans. The bottom line is that Costco entering Medicare is a significant development, one that could force traditional insurers to compete more aggressively on simplicity, transparency, and value. As Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek, bringing a trusted brand into Medicare could create effects that extend well beyond Costco. But at the end of the day, the best plan for you is the one that fits your health needs, your budget, and your personal situation—not the one with the most recognizable logo on the brochure. So by all means, let Costco and SCAN do the preliminary vetting for you. Just do your own homework before you make the final call.
