A retailer known for rotisserie chickens and bulk paper towels is moving into a business regulated by the federal government rather than stocked on a warehouse shelf. Costco has agreed to put its name on Medicare Advantage coverage for the first time, working through a nonprofit health insurer that already manages care for hundreds of thousands of older adults. The arrangement covers three markets that together hold an estimated five million people eligible for Medicare, though the plans cannot be sold to a single one of them until federal regulators sign off.
A Retail Giant’s First Health Plan Partnership
The insurer behind the deal is SCAN Health Plan, a nonprofit based in Long Beach, California, that currently serves roughly 460,000 Medicare members across 33 counties in Arizona, California, Nevada, New Mexico, Texas and Washington. SCAN has sold Medicare coverage for decades; Costco has never sold any. Under the structure announced by the two organizations, SCAN remains the licensed insurer that underwrites and administers every plan, while Costco lends its retail brand, marketing reach and warehouse footprint to reach members who already shop there.
SCAN and Costco describe the expanded alliance, announced August 18, 2026, as Costco’s first comprehensive partnership with a Medicare plan. The companies say the goal is a Medicare Advantage product built around a redesigned pharmacy experience, an over-the-counter allowance branded Medflex, and added vision and audiology benefits. None of those benefits can be marketed to a specific enrollee until the underlying plan clears review.
SCAN itself is not a household name outside the six states where it already operates, which is part of why the Costco brand matters to the arrangement. As a nonprofit, SCAN has no shareholders to answer to and has spent decades competing against for-profit national carriers for Medicare Advantage members on service and network access rather than marketing budget. Pairing that insurance track record with a retailer whose warehouse card is already in tens of millions of wallets is the core bet behind the deal, according to SCAN’s own announcement of the partnership.
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Two States for Medicare Advantage, One for a Supplement Plan
The initial rollout, as described by both companies, is narrower than the five-million-enrollee figure might suggest. Costco and SCAN plan to begin with Medicare Advantage products in two states and a stand-alone Medicare supplement plan in a third. The companies have declined to name any of the three states or give a firm launch date, citing restrictions on public disclosure while a Medicare Advantage application sits in front of the Centers for Medicare & Medicaid Services. New or expanded Medicare Advantage offerings go through a formal application and review cycle before an insurer can enroll a single member, a process CMS documents on its own Medicare Advantage Applications page. Trade coverage of the announcement has consistently reported that it could take a few years before a Costco shopper is able to purchase one of these plans, not that a plan is already for sale.
The five-million figure is the combined Medicare-eligible population across the three target markets, not a projection of how many people are expected to enroll. It is a market-size estimate cited by SCAN and repeated in the surrounding coverage, offered to show the scale of the opportunity rather than a promise about how many seniors will actually sign up once a plan clears CMS review.
Why a Costco Card Will Not Buy a Cheaper Health Plan
One structural detail limits how far the partnership can lean on Costco’s core business: federal rule bars an insurer from tying enrollment in a Medicare Advantage or Part D plan to any cash or monetary benefit, including a retail membership. Under the marketing requirements codified at 42 CFR 422.2263, plans cannot offer rebates or gifts of more than nominal value as an inducement to enroll, and any gift has to be available to everyone in a marketing audience regardless of whether they sign up. That means a Costco Medicare Advantage plan cannot come bundled with a membership discount, a free renewal or any other retail perk tied to buying the coverage.
Instead, the plans are expected to be sold the way most Medicare Advantage coverage already is: online, through licensed independent brokers, and in person, in this case inside participating Costco warehouses rather than through a membership desk. SCAN keeps the underwriting and the licensing; Costco supplies the foot traffic and the name recognition, which the companies are betting matters to a retiree who already trusts the Kirkland Signature label on groceries and tires.
The same federal rule also keeps the reverse from happening: SCAN cannot use a Costco enrollment to justify charging a different premium than it would offer someone who signs up through a broker or online, and Costco cannot make a warehouse membership cheaper or more valuable for someone who buys a health plan. Every enrollee, retail member or not, has to be offered the same plan terms under the same CMS-approved benefit design.
A Deal Still Waiting on Washington
Nothing about the announcement changes what a current Medicare beneficiary can buy this fall. The Annual Enrollment Period that runs October 15 through December 7 will not include a Costco-branded plan in any state, regulatory approval or not, because the earliest the companies have suggested for an actual launch is measured in years rather than months. Industry coverage of the deal, including reporting from Becker’s Payer Issues, has treated it as a long-horizon strategic move by both companies rather than a near-term product launch, consistent with how SCAN and Costco have described it themselves.
What is confirmed is the shape of the deal: a nonprofit insurer with decades of Medicare experience, a retailer entering senior health coverage for the first time, a five-million-person addressable market spread across three still-unnamed states, and a federal approval process that has to run its course before any of it reaches a shopper’s mailbox.
This article was produced with the assistance of AI and reviewed by The Financial Wire editorial team.
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David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
