Costco Enters $500B Medicare Advantage Market with SCAN

For healthcare leaders, this is a clear signal that the line between retail and payer is dissolving. Costco's move with SCAN puts a trusted warehouse brand directly into the $500 billion Medicare Advantage market, using existing health services as a differentiator rather than competing on premium alone. The pilot's success will depend on whether integrated pharmacy, vision, hearing, and OTC benefits actually improve member navigation and retention.

Costco Wholesale is making a significant move into the U.S. senior health insurance market, announcing on August 18, 2026 that it will partner with Long Beach, California-based nonprofit insurer SCAN Group to launch a co-branded Medicare Advantage plan. The deal, disclosed in a SCAN news release and reported by The Seattle Times and The Spokesman-Review, positions the Issaquah, Washington-based warehouse retailer to compete in a Medicare Advantage industry valued at more than $500 billion. It also gives SCAN, a midsized nonprofit with roughly half a million members, a powerful new distribution channel through one of the most trusted retail brands in America.

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Costco's move with SCAN puts a trusted warehouse brand directly into the $500 billion Medicare Advantage market, using existing health services as a differentiator rather than competing on premium alone.

According to The Wall Street Journal, the companies plan to begin selling the jointly named Medicare Advantage products in two states and a Medicare supplement product in a third, a footprint that would give the partnership access to approximately 5 million Medicare enrollees. The companies did not specify which states or when the rollout would begin. SCAN said the products will integrate with Costco's existing prescription, vision, hearing, and over-the-counter offerings, an important design choice because those services already attract older shoppers and can make the plan feel more tangible and convenient than a typical insurance card.

For Costco, the move extends a decade-long push into healthcare services. The company already operates pharmacies, optical departments, hearing aid centers, and a broad OTC health assortment inside its warehouses, often at prices below traditional drugstores. Its membership model gives it a direct, recurring relationship with consumers, including a large base of older adults who shop for value and routine essentials. By adding a Medicare Advantage plan under the Costco brand, the retailer is not necessarily becoming a full-risk insurer; SCAN, as the licensed nonprofit health plan, will presumably bear the regulatory and underwriting responsibilities. Costco's role appears to be distribution, brand, and member experience integration, which is a relatively asset-light way to enter a huge, growing market.

For SCAN, the benefits are equally clear. As a California-based nonprofit Medicare Advantage insurer with around 500,000 members, SCAN has deep experience serving seniors but limited national brand recognition. Partnering with Costco gives it access to millions of Medicare-eligible shoppers who already trust the warehouse brand for prescriptions, glasses, hearing aids, and everyday health products. The partnership is described as an expanded one by SCAN CEO Sachin H. Jain, suggesting the two organizations already have some relationship, likely around member discounts or referral programs. Jain framed the strategy around navigation and trust: Older adults want healthcare that is easier to navigate, more responsive to their needs and rooted in organizations they trust.

Costco CEO Ron Vachris emphasized the company's long-term member focus, saying Costco has spent more than 40 years listening to its members and earning their trust. That trust is the core asset being monetized. Medicare Advantage plans are heavily marketed during the annual enrollment period, and brand recognition can materially lower customer acquisition costs. A Costco-branded plan could differentiate itself by bundling plan benefits with in-store deals, such as OTC allowances usable at Costco, or discounts on prescription, vision, and hearing services. If executed well, the integration could make Costco a destination for senior health needs rather than just a weekly shopping trip.