Costco Is Selling Medicare Plans. Don't Buy On Brand Alone

Costco has announced plans to sell Medicare Advantage plans and a Medicare supplement policy in a pilot program with SCAN Health Plan, a nonprofit insurer.

Richard Stephens, Costco’s senior vice president for pharmacy, described the new products the way the warehouse chain describes everything else on its shelves.

Costco members “know that if they buy something from Costco, it has been vetted, and we feel it’s the best thing in the category,” he told The Wall Street Journal. “That’s really what we’re trying to do with this particular product.”

That’s a fine standard for olive oil and tires.

It’s not how Medicare works.

The right plan is, ultimately, the one that covers your doctors, your drugs and that holds up when your health changes — variables that differ from person to person and from ZIP code to ZIP code. And that changes every year.

And a brand can’t vouch for any of them on your behalf.

Worse, brand trust tends to lower scrutiny at exactly the moment the decision is hardest to reverse. “And to boot, Medicare Advantage plans require a complete reassessment each and every year during the annual enrollment period, which runs from Oct. 15 to Dec. 7,” said Marcia Mantell, president of Mantell Retirement Consulting and author of Creating Your Medicare Recipe. “Maybe that’s something a 65-year-old is willing and able to do, but an 80- or 89- or 97-year-old has little to no hope of navigating the complexity of networks and covered prescriptions. And the Medicare Advantage insurers know that.”

What Costco and SCAN announced

Pending approval from the Centers for Medicare & Medicaid Services (CMS), Costco and SCAN plan to sell a jointly branded Medicare Advantage product in two states and a Medicare supplement in a third.

The three target markets together include roughly five million Medicare enrollees. Executives did not name the states or give a launch date, citing disclosure limits while the bids sit with CMS.

SCAN, based in Long Beach, Calif., serves about 460,000 members and offers Medicare Advantage plans in California — its core market — plus Arizona, Nevada, New Mexico, Texas and Washington. The insurer added 127,000 members during the 2026 annual enrollment period, a 40.6% increase, and now reports roughly $8 billion in annual revenue.

For Jae Oh, a certified financial planner and author of Maximize Your Medicare, the unanswered question is not the brand. It’s the provider list.

“SCAN is not well known nationally, but it has an established footprint in selected states,” Oh said. “Whether or not SCAN has done enough work to create that network in the new locations is ultimately, for me, the key question.”

That answer will depend heavily on where the plans land. In fragmented markets — Oh cited Miami and Manhattan as examples — multiple hospitals and practices don’t necessarily coordinate with one another. “For the Medicare Advantage carrier, they’re the ones who have to coordinate the combination of different providers to fit inside their plan,” he said.

One detail hasn’t been reported anywhere: SCAN does not currently sell Medicare supplement insurance. Its own consumer materials describe Medigap as a product other companies offer. “Does it even sell group health insurance plans?” asked Mantell. “How would a consumer who is in their 70s or 80s go about evaluating such an unknown name even if Costco puts a stamp of approval on it? Costco isn’t navigating your health care system or talking to your doctors.”

Whether the supplement in that third state is a new SCAN product or is underwritten by a partner carrier hasn’t been disclosed — and it matters, because a supplement’s long-term value depends heavily on the carrier’s rate-increase history.

For her part, Katy Votava, president of Goodcare and author of The Baby Boomer’s Guide to Medicare, is skeptical of whatever the new offering might be.

“Effective Medicare coverage is closer to a custom-made suit than a one-size-fits-all T-shirt,” she said. “Costco has strong brand loyalty and no doubt can bring many potential customers to the table. The question is, is an organization that is well known for bulk purchases of consumables a good fit for providing effective Medicare health coverage?”

Votava added: “For me the jury is out until we see the breadth of the Medicare Advantage care provider and hospital networks. If those networks are robust, then it’s worth consumers checking into. If not, then not.”

What SCAN typically builds

Costco and SCAN have released few details about the new plans. But SCAN’s current lineup suggests what this insurer typically builds, which is not the same as what Costco will ultimately sell.

Structure. Almost entirely HMO, plus some HMO-POS plans and Dual Eligible Special Needs Plans, including California’s only Fully Integrated Dual Eligible Special Needs Plan. HMOs mean lower costs (if you don’t get sick, noted Mantell) but tighter restrictions — specialist referrals are typically required, and there’s no out-of-network coverage outside emergencies. That’s the network-restrictive end of the market, which is worth knowing if you’re shopping on brand familiarity. “Plus, the consumer must first check with their doctors and specialists to see if they are even in the health maintenance organization (HMO) and accepting the insurance,” said Mantell.

Premiums. Most SCAN plans carry a $0 monthly plan premium. Select offerings, such as SCAN Venture plans, feature a monthly premium (typically $20 to $75) paired with a Part B giveback of up to $185 a month in eligible service areas for members who pay their own Part B premium. The standard Part B premium still applies — $202.90 in 2026.

Oh cautioned that the $0 premium is becoming less universal. “A few years ago, we’ve seen the vast abundance of plans, a vast majority even, at zero dollars a month,” he said. “But nowadays, over the last couple of years, due to the strain put on Medicare Advantage carriers, they’ve had to begin to start charging a premium in a very competitive world.” Costs can also differ within the same plan from one location to another, he said.

Cost sharing. Many 2026 plans have $0 primary care copays, $0 copays on some specialist visits and $0 copays on Tier 1 and Tier 2 drugs. SCAN says roughly 90% of the medications its members take carry no copay, according to Fierce Healthcare. “However, as soon as you get sick, need a surgery, or have a cancer diagnosis, the ‘free’ or $0 copays shoot up to the out-of-pocket maximum; up to $9,250 this year for in-network services, and up to $13,900 for out-of-network services,” said Mantell.

Supplemental benefits. An over-the-counter allowance, dental through Delta Dental with an optional PPO buy-up, vision through EyeMed, transportation, fitness and a FlexEssentials card usable at thousands of retailers. Some plans add acupuncture, chiropractic care and fixed-cost hearing aids.

That last item is worth watching. SCAN’s FlexEssentials card currently works at a wide range of retailers. If a Costco-branded version narrows where those dollars can be spent, that would be a restriction packaged as an integration.

The extras, Oh argues, are the least useful basis for comparison, because competition has flattened them. Some counties have few plans; others have 50 or 100. In those markets, he said, “a lot of the nuances regarding copay, regarding fitness center, preventative dental — these things have effectively been competed away. What drops out, however, is your access to your health care provider. That then becomes the key.”

Quality. SCAN earned 4 stars in California for 2026, its 13th consecutive year at 4 stars or higher, along with 4.5 stars in Arizona and 4 in Nevada. Texas, New Mexico and Washington didn’t have enough data for an overall rating. NerdWallet puts SCAN’s enrollment-weighted average at 4.01 stars against 4.02 for the companies it reviews, and flags member-experience measures as a relative weak spot. Solid, in other words — but not categorically better than what’s already available. Nonetheless, Mantell noted that SCAN is “an unknown name, for the most part, with little experience in Medicare Part C plans and no experience with Medigaps.”

A crowded shelf, and a cautionary precedent

Cracking the Medicare Advantage market is a tough row to hoe. As of April 2026, UnitedHealth led with more than 9.2 million enrollees and 26% of the market. Humana was second with 7.1 million and 19.8%. CVS Health’s Aetna held third with more than 4.1 million. Kaiser Permanente moved into fourth, pushing Elevance Health to fifth after a 15.8% enrollment decline. Centene was sixth.

There are 301 insurers in the Medicare Advantage market, but 78.2% of enrollees are with just 10 of them. KFF found that 90% of Medicare beneficiaries live in counties where one or two companies cover more than half of all Medicare Advantage enrollees, and that 97% of counties are highly or very highly consolidated.

This also isn’t the first time a major retailer has tried to sell Medicare coverage on the strength of its name. Walmart co-branded Medicare Advantage plans with Clover Health in eight Georgia counties for 2021; the arrangement was discontinued for 2022. Walmart Health closed in 2024. Costco is describing its own effort as a pilot.

“And after major corporations finish their ‘pilot phase,’ and see that this doesn’t work, it’s the 95-year-old left sitting on the side of the road with no health insurance,” said Mantell. “And next year’s costs that are markedly higher.”

Oh offered a counterweight. SCAN, he noted, is not a startup. “SCAN is an already established company, meaning that it exists today. It has been through the drill in these locations,” he said — and those locations are not easy ones. “California, Arizona, Texas, three places where they already exist, are very, very competitive,” with both national carriers and well-known regional names. Whether SCAN and Costco can together assemble a network attractive enough to pull members away, he said, “remains to be seen.”

Ultimately, said Votava, “all health insurance plans that stand the test of time rely on the law of large numbers. It will be interesting to see what the uptake is for these new Medicare Advantage and Medigap offerings.”

Four questions that matter more than the name

Costco shoppers are loyal, and that loyalty is earned. But whether a Costco-branded Medicare plan is right for you has almost nothing to do with the name on it. Ask these four questions instead — of this plan or any other.

Are your doctors in network? Networks are county-level and change every year. The only real test is looking up each provider in that specific plan’s directory, then calling the office to confirm. It’s the first thing Oh checks and the thing he says people most often skip. “The last thing that I want for our clients is to go to the billing office, arrive at the desk, and be told we don’t take this insurance,” he said. “It’s very, very important that you make sure that your providers, to the degree that you can control, are inside the network.”

Are your drugs covered? Check the formulary tier, prior authorization requirements, step therapy rules and the pharmacy network. A plan is only cheap relative to the drugs you actually take. If they are covered, would they be less expensive in a standalone Part D plan? Oh flags drug classes with multiple brands as the common trap. “Especially with the advent of GLP-1 and the ongoing use, for example, of insulin, you’re going to want to be very careful, because your doctor may have prescribed a specific brand,” he said. Checking that a plan covers insulin generally “may not be quite enough,” he added. “Your particular brand must be covered by your particular plan.”

What county are you in? Benefits and premiums vary by county, not by state and not by brand. The same plan name can be a different product 40 miles away.

Where is your health headed? This is the variable nobody weighs. Medicare Advantage is cheapest when you’re healthy and hardest when you’re not. Prior authorization, network limits and out-of-pocket maximums matter most in the year you get sick. Oh frames it as a question of who decides. Under Original Medicare and Medigap, he said, a service recommended by your physician and approved by federal Medicare gets cleared “almost as a rubber stamp.” Under Medicare Advantage, it’s “quite different” — the carrier has a say, in part to guard against fraud, waste and abuse and to make sure unnecessary procedures aren’t performed.

None of these are things a brand can answer for you. And if you get them wrong, the exit is narrower than the entrance.

Why the membership isn’t included

Don’t expect a Costco membership to come with a Costco-branded Medicare plan. CMS caps nominal gifts at $15 per item and $75 per person annually, so a membership can’t be bundled in.

The broader point is worth sitting with: federal rules are built on the assumption that people shouldn’t choose coverage for reasons unrelated to the coverage. Brand affinity is the version of that impulse the rules can’t reach.

What to do instead

Run your own drug list and provider list through the Medicare Plan Finder at Medicare.gov. Talk to a counselor at your State Health Insurance Assistance Program, which is free. If you’re approaching 65 and undecided, understand that starting with Medigap preserves options that starting with Medicare Advantage does not. And if you’re already in a Medicare Advantage plan and inside month 12, know your date.

Trust is a shortcut

Trust is a reasonable way to shop. It saves time, and in most aisles it works fine. Medicare is the aisle where it doesn’t — the product is personalized, the consequences arrive years later, and the return policy has an expiration date.

Every Medicare Advantage carrier operates under strict federal rules, Oh said, and the brand on the card is one input among many. What matters more is that “the network is well understood” and the benefits are “very, very clear” — “so that you don’t receive an unexpected surprise. That’s the main thing.”

Costco may well put its name on a good plan. The question worth asking isn’t whether you trust the brand. It’s whether the plan fits.

And the other question worth asking, according to Mantell, is this: “What’s really in this for Costco?”

Related: Costco keeps discontinuing popular products