Known for its bulk groceries, low-cost gasoline, and member-focused deals, retail giant Costco is expanding into a brand-new space: Medicare plans. Through a partnership with SCAN Health Plan, the warehouse club is rolling out co-branded Medicare Advantage products.
While shoppers might trust Costco to deliver top value on household goods, money expert Clark Howard warns that mixing the wholesale brand with Medicare Advantage may not be wise for seniors.
Here is why Clark is deeply skeptical of the warehouse club’s newest venture — and why he urges shoppers to proceed with extreme caution.
Costco Is Getting Into the Medicare Advantage Game
Costco’s venture into health insurance represents a major shift. While the warehouse chain already offers pharmacy services, vision care, and hearing aids, selling full-fledged Medicare Advantage insurance policies takes things to an entirely different level.
“Costco is getting into the Medicare Advantage game. I don’t like that Costco is doing it.”
For Clark, the issue isn’t about Costco’s retail value; it’s about the fundamental structure of Medicare Advantage plans.
Why Clark Calls Them “Disadvantage” Plans
Although private insurance carriers push Medicare Advantage plans for their low monthly premiums and extra perks (like gym memberships or vision allowances), Clark has long argued that these plans carry hidden costs that surface when members need care the most.
“I don’t like the idea of Advantage plans. People love ‘disadvantaged’ plans till something goes wrong with their health. And when the chips are down, they need care. And then the ‘disadvantage’ plan is all about denial.”
Unlike traditional Medicare paired with a Medigap policy — which allows patients to see virtually any doctor or specialist nationwide — Medicare Advantage relies on restricted provider networks, prior authorizations, and private insurers managing claims. When major health challenges arise, insurers often impose stringent limits or deny critical treatments to manage costs.
A Limited Rollout — For Now
By putting its trusted name on these insurance offerings, Costco may lead long-time members to assume that a store-branded Medicare plan carries the same low risk as buying a bulk paper towel deal. Clark worries that this brand trust could lull shoppers into a false sense of security.
Fortunately for consumers, the initiative is starting on a very small scale. Reports indicate that Costco and SCAN Health Plan are launching Medicare Advantage in just two states.
“So Costco getting involved in ‘disadvantage’ plans is an experiment. I’m not going to say any soft-pedal this at all, but fortunately, I think it’s only in two states. I wish it was in zero states.”
Final Thoughts
If you are approaching age 65 or looking at Medicare coverage options during open enrollment, don’t let retail brand loyalty dictate your healthcare choices.
Before signing up for an Advantage plan, carefully evaluate original Medicare paired with a Medicare Supplement (Medigap) plan and Part D drug plan to protect yourself from denial-of-care issues down the road.
If you want to talk through your options, try SHIPhelp.org or Chapter. Both are free to use and offer unbiased advice.
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