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Can Costco hack Medicare Advantage's consumer loyalty problems?

Costco announced it'll sell Medicare Advantage plans in partnership with SCAN Health Plan, testing the wholesaler's consumer loyalty in a new market.

Sara Heath
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Published: 20 Aug 2026

A new partnership with California-based payer SCAN Health Plan marks Costco's first step into the Medicare Advantage market, as the wholesaler unveiled new branded health insurance plans this week.

The deal is scant on details so far, but SCAN did confirm it was launching Medicare Advantage products in two states, plus a Medicare supplement in a third state. The total addressable market for both policies will be about 5 million Medicare eligibles, although the payer could not reveal where or when these plans would hit the market.

The announcement is a shakeup for the Medicare Advantage industry. These plans could be enticing for seniors who can shop for them while they pick up their prescriptions, a year's supply of paper towels and even a $1.50 hot dog on the way out.

Medicare Advantage as an industry doesn't have a great track record of streamlining the buying experience, according to Sachin Jain, CEO of SCAN Health Plan.

"A lot of times when you enroll in a Medicare Advantage plan, we introduce you to a whole bunch of new vendors that you've never heard of before," he said.

For years, people get their plans generally selected for them from their employer. But the day they turn 65 or choose to retire, they're introduced to the Medicare alphabet soup of Parts A, B, C and D from  different insurance companies consumers have likely never heard of.

"Part of what we're trying to do here is simplify the buying experience by aligning with a brand that has a high degree of trust with older adults, namely Costco, and do something to truly simplify the experience," Jain outlined.

The partnership isn't just a convenience move. It'salso  one potential solution to Medicare Advantage's trust problem.

SCAN, Costco rise to healthcare's consumer trust challenge

According to consumer intelligence company JD Power, the private alternative to traditional Medicare has seen floundering member experience ratings for two years in a row. This year's member experience scores are down 12 points over last year's, coming in at 611 on a 1,000-point scale. Compared to 2024, member satisfaction is down 41 points. Overall, only 43% of JD Power survey respondents said they strongly agreed that their plan is a trusted partner in their health and wellness.

Notably, SCAN has somewhat avoided flagging member satisfaction numbers, according to Arielle Trzcinski, a principal analyst at Forrester who's spent years examining payers like SCAN and analyzing overall trust in healthcare.

"What SCAN Health is really known for is making sure that they lean into just a really deep understanding of their customers and what their customers need," Trzcinski said.

That's important for all payers, and especially in Medicare Advantage. It's not enough to keep members engaged and focused on their healthcare. Strong member engagement and care management will yield good outcomes, but plans also need to keep members enrolled and loyal so they don't see the cost of churn. Trzcinski said SCAN's focus on customer experience has helped it thrive when Medicare Advantage member experience has otherwise dampened.

That's what has made it such a good fit for a Costco partnership, she added.

"Folks go to Costco because they know they can get a good deal, but there's also going to be quality behind that," Trzcinski noted. "They trust Costco to curate this set of brands and maybe help them discover things that they wouldn't otherwise be able to find."

That brand symbiosis is exactly what drew SCAN and Costco together, Jain explained. He'd never partnered with another company that was more member-obsessed than Costco, he said, which aligns with SCAN's North Star of putting the member at the center of all its work.

"We're really thinking hard about how do we reimagine the experience of being an older adult, accessing these benefits, and make them as easy as possible to use in places where you already spend your time," Jain said, referring to the partnership work being done with Costco.

In other words, Costco and SCAN are leveraging one another's brand to not only better serve the customer but also to penetrate more deeply into a market that's been struggling.

What this means for the retail, payer space

There's a big growth opportunity in this partnership, especially as SCAN deepens its relationship with a retail giant like Costco.

The wholesale retail space admittedly has far more regulatory flexibility than the Medicare Advantage space, so there's more room for innovation. Still, Trzcinski pointed out key areas where health plans can improve, like simplifying the consumer experiences, improving access and humanizing the transaction. These are all essential to gaining members' trust, but most Medicare Advantage plans underperform there while retailers like Costco succeed.

Indeed, Costco is a top 10 grocery in 2026, according to the American Customer Satisfaction Index, and it enjoys strong brand loyalty.

It's that brand perception that could lead Costco to succeed in the Medicare Advantage market where others have not. In 2020, for example, Walmart unveiled Walmart Insurance Services, LLC., through which people can buy Medicare Advantage, Medigap and Medicare Part D plans.

That brokerage still exists, but according to Trzcinski, Costco's reputation among its customer base might help it be more successful.

"The brand association that consumers have with Walmart is, 'help me get access to affordable products,'" she explained. "It's different. That association is different with a Walmart versus a Costco."

While consumers of both retailers think a lot about cost, the folks shopping at Costco are thinking about it differently. They are thinking about value, not pinching pennies, and they know Costco can bring them value through bulk buying and the quality of the products sold, Trzcinski said.

Now, it's time for SCAN to deliver, as its products are poised to be sold to the highly loyal Costco consumer base. Trzcinski said SCAN's Medicare Advantage plans are ready, as the payer has steered its focus toward the customer and not outside forces.

"I've followed SCAN Health for a number of years, been looking at how they've reacted even to some of the volatility that we saw through different administrations, et cetera, and they've doubled down and said, 'our customers choose us because they trust us to make sure that we're there for them,'" she concluded.

"They have seen growth as a result of that. For them, it has been the right investment and they've seen those outcomes."

For SCAN's part, they intend to use the partnership to continue that work.

"Older adults have been jerked around by health plans for many years now, and we want to create experience with a high degree of benefit stability, experience consistency and operational fidelity," Jain concluded. "All things that are easy to say, but hard to deliver on."

Sara Heath is an executive editor at Xtelligent Healthcare Media, where she covers patient engagement, healthcare policy and health IT.

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