The news: Costco will enter the Medicare market with a limited rollout of Costco-branded plans in partnership with SCAN Health Plan. Two Medicare Advantage plans and a Medicare supplement will launch in undisclosed markets encompassing about 5 million Medicare enrollees, per the Wall Street Journal, pending regulatory review and approval. The plans won’t include a Costco membership (which isn’t allowed under federal rules) but will be sold in Costco stores, as well as through insurance agents and online.

Why it matters: Costco’s Medicare pilot builds on its existing partnership with SCAN, which began in October when the retailer became SCAN’s preferred pharmacy, allowing negotiated drug costs at Costco pharmacies, and letting SCAN members use over-the-counter (OTC) and eyewear allowances in-store at Costco. The pair also have substantial customer overlap: About 75% of SCAN members already shop at Costco, its chief commercial officer told Fierce Healthcare in October.

Costco is tapping SCAN’s established Medicare presence in hopes that SCAN members will make Costco their preferred pharmacy and/or switch over to one of the new cobranded plans. SCAN’s Medicare plans currently cover 560,000 seniors, per the WSJ, across six states, and are highly rated, scoring an above-average 4 stars or higher by the CMS. The duo plans to add senior-focused healthcare offerings such as more vision, audiology, and OTC benefits, per SCAN.

Implications for retail pharmacies: Costco isn’t the first retail pharmacy to offer co-branded Medicare plans. Walgreens has a co-branded plan with Alignment Health, while Kroger offers Medicare Advantage plans with Elevance, Priority Health, and Select Health. Walmart also tried a co-branded plan and preventive care for adults 65+ with UnitedHealth Group, but ended when the retailer abandoned its broader Walmart Health clinic strategy in 2024.

Few brands have earned the kind of consumer trust and loyalty Costco has, which can be powerful in a crowded instance market. With the average Medicare beneficiary having many plans to choose from, Costco’s name could provide a familiar, credible signal. Its strong reputation for consumer trust paired with SCAN’s strong customer satisfaction ratings could give the co-branded plans a meaningful advantage with seniors. Retailers will be watching whether Costco can use Medicare to deepen customer loyalty and drive prescription volume as the pilot expands.

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