• Costco and nonprofit insurer SCAN Group plan to launch Costco-branded Medicare Advantage plans in two states and a Medicare supplement policy in a third.
• The experiment comes as other insurers have been retreating from Medicare Advantage and millions of seniors have been forced to change plans.
• Costco's reputation for screening products may reassure shoppers, but Medicare coverage still needs to be compared doctor by doctor, drug by drug and dollar by dollar.

Costco has built an enormous business partly by convincing shoppers they don't have to agonize over every purchase. The warehouse chain stocks relatively few versions of many products, negotiates hard on price and essentially tells members: We've already done some of the comparison shopping for you.

Now Costco wants to try something similar with a purchase considerably more consequential than a 30-pack of paper towels.

The retailer is working with SCAN Group, a nonprofit health insurer, on a limited rollout of jointly branded Medicare plans, The Wall Street Journal reported. The companies plan Medicare Advantage products in two states and a Medicare supplement, or Medigap, policy in a third. They have not disclosed the states or launch dates while awaiting regulatory approvals. Together, the initial markets contain about 5 million Medicare beneficiaries.

The plans are expected to be sold through Costco stores as well as insurance agents and online channels. Costco memberships can't be included as a benefit of the health plans because of federal restrictions.

The Costco name is part of the product

The unusual element isn't simply that Medicare insurance will be available through Costco. The company already provides access to a Medicare insurance marketplace through a third-party arrangement.

This time, the Costco name will be attached to the plans themselves.

SCAN CEO Sachin Jain told the Journal that the companies want to create Medicare coverage that is easier for consumers to understand and use, with connections to Costco services including prescription drugs, vision care, hearing products, over-the-counter medicines and potentially food benefits.

SCAN specializes in Medicare and currently has about 460,000 members. Its existing Medicare Advantage footprint includes Southern California as well as Arizona, Nevada, New Mexico, Texas and Washington state.

Costco pharmacy executive Richard Stephens said the company has seen older customers struggle with insurance coverage at the pharmacy counter. The retailer views the new venture as a pilot from which it expects to learn before deciding how broadly to expand it.

That could be an appealing proposition for older consumers confronted each fall with an increasingly bewildering collection of premiums, copayments, drug formularies, provider networks and benefit packages.

But there is a catch.

Health insurance isn't a rotisserie chicken

Costco has an unusually powerful reputation for value. That reputation may be well deserved when the question is which olive oil, television or hearing aid to buy.

Medicare coverage is different because "best" depends heavily on the individual patient.

A Medicare Advantage plan that works wonderfully for one Costco member could be a poor choice for the person standing behind them in the checkout line.

Among the questions that matter:

• Are your doctors and hospitals in the plan's network?
• Are your prescription drugs on its formulary and at what tier?
• What are the copayments for specialists, hospital stays and outpatient procedures?
• What is the annual maximum you could pay out of pocket?
• Does the plan require referrals or prior authorization for care you regularly use?
• What happens if you need medical care while traveling or spending part of the year somewhere else?

Medicare itself advises consumers to consider doctor and hospital choice, costs and coverage when comparing Original Medicare with Medicare Advantage. Medicare Advantage members may need prior authorization before a plan will cover certain services or supplies and may face network restrictions that don't apply to Original Medicare.

So a Costco logo may be a useful starting point. It shouldn't be the end of the shopping process.

Costco is entering while others retreat

The timing makes the Costco-SCAN experiment particularly interesting.

Medicare Advantage, once one of the insurance industry's great growth businesses, has been going through a shakeout as insurers contend with higher medical costs, changes in federal payments and other pressures. UnitedHealthcare, Aetna and other carriers cut plans or withdrew from some markets for 2026.

The result wasn't merely an inconvenience for insurers.

Nearly 3 million Medicare Advantage beneficiaries — roughly 10% of enrollees — had to find different coverage for 2026 because their plans were discontinued, according to research reported by Reuters. Rural beneficiaries were about twice as likely as urban beneficiaries to be affected, Reuters reported.

In seven states, more than 40% of Medicare Advantage enrollees were affected by discontinued plans. In Vermont, the figure reached 92%, the news agency said.

CMS had projected that Medicare Advantage enrollment could slip from 34.9 million in 2025 to about 34 million in 2026, although the agency said actual enrollment might prove stronger than insurers' projections.

In other words, Costco and SCAN aren't entering an easy, rapidly expanding market. They're entering one that has recently been producing unpleasant surprises for both insurers and patients.

Medicare Advantage and Medigap aren't the same thing

The Costco experiment will also span two very different types of insurance.

A Medicare Advantage plan replaces Original Medicare as the mechanism through which a beneficiary receives Medicare-covered services. The private insurer generally combines hospital and medical coverage and usually prescription drug coverage, often adding benefits such as dental, vision or hearing coverage. Plans can restrict provider networks and require prior authorization.

A Medigap policy, by contrast, works alongside Original Medicare and helps cover some of the deductibles, coinsurance and other costs Medicare doesn't pay. A person generally cannot have both Medicare Advantage and Medigap at the same time.

There's another important shopping difference: Medigap policies are standardized by letter in most states. A Plan G, for example, provides the same basic benefits regardless of which insurer sells it, although premiums can vary substantially. That makes price comparison particularly important.

Costco could change how Medicare is sold

The bigger story may ultimately be less about insurance than about trust.

Medicare beneficiaries are bombarded with television commercials, mailers, phone calls and pitches from insurers and brokers every enrollment season. Costco is proposing a very different sales proposition: a familiar retailer effectively putting its seal of approval on a limited selection.

That could simplify an intimidating process. It could also make consumers less inclined to compare alternatives.

Financial terms of the Costco-SCAN partnership haven't been disclosed. That makes it important for consumers to remember that a Costco-branded Medicare plan is still an insurance product offered by a particular insurer, not an independent recommendation of all the Medicare choices available in a market.

Costco may turn out to be very good at Medicare.

But even loyal Costco shoppers should probably leave one familiar shopping habit at the warehouse door: don't assume the product on the shelf is automatically the right one for you.