Costco is launching Medicare Advantage plans with SCAN Group, banking on the same brand trust that sells its chicken

Boomers who shop at Costco may soon be able to check out a new health-related product at the warehouse giant: a Medicare health plan.

As the Wall Street Journal reports, the chain is planning a trial of Costco-branded Medicare Advantage plans in two states and a Medicare supplement in a third. It has not yet revealed which states.

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The franchise is doing so in partnership with California-based SCAN Group, a California-based nonprofit that provides an array of healthcare services to older Americans, including insurance plans.

"We're trying to create a win-win," SCAN Health Plan CEO Sachin H. Jain told USA Today.

"Something that was going to be good for seniors, good for SCAN and good for Costco."

Jain said he pitched the idea to Costco because of the warehouse club's reputation with older Americans and its reach. According to Numerator, one in three Costco members is a Boomer, many of whom qualify for or are already enrolled in Medicare plans.

Costco's Senior Vice President for Pharmacy Richard Stephens told the Wall Street Journal that the company aims to build on its reputation for reliability — the same thing that draws customers back for its beloved rotisserie chicken and Kirkland products — with the insurance product.

As Stephens said, customers "know that if they buy something from Costco, it has been vetted, and [they] feel it's the best thing in the category."

Carrie Graham, Director of the Medicare Policy Initiative at Georgetown University's Center on Health Insurance Reform (CHIR), told Moneywise that the idea is a piece of "brilliant marketing," citing her father's belief that Costco products are "the best quality."

"There's a really strong trust in the brand, especially among older adults," she said.

She noted that it is a great way to expand Costco's pharmacy, vision, hearing and over-the-counter products, adding that the chain has a well-earned reputation for offering drugs at affordable prices.

In April, Elizabeth Warren invoked Costco when she told the Senate Finance Committee that a generic prescription for the heartburn medication pantoprazole (brand name Protonix) costs $16.99 at Costco compared to $200 for the brand name on the federal TrumpRx prescription site.

Such affordability could enhance the value of a Costco-branded Medicare Advantage plan.

Meanwhile, Graham added, SCAN will benefit from operational savings by leveraging Costco's reach to recruit Medicare plan members instead of relying solely on insurance brokers.

She noted that the health insurance provider Humana launched a similar arrangement with a discount retailer in 2010, when it partnered with Walmart to offer the Humana Walmart Value Rx Plan, a Prescription Drug Plan (PDP). The program is still offered at Walmart, but it is now also available at Costco, Sam's Club and a number of other retailers.

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Graham cautioned that the details of the Costco-SCAN Medicare plans still have to be worked out and approved by the federal government before launching.

The partners may be planning to launch the pilot between October 15 and December 7, when Americans can sign up, switch or cancel Medicare plans.

Whenever it may roll out, she said it's good to see SCAN increasing access to Medicare Advantage plans at a time when some insurers are dropping the coverage.

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This article originally appeared on Moneywise.com under the title: Costco is launching Medicare Advantage plans with SCAN Group, banking on the same brand trust that sells its chicken

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