SEATTLE — Amazon, in an effort to keep growing its Prime membership program, will offer discounted membership to the tens of millions Medicaid recipients.
Starting Tuesday, people insured by the U.S. government health system will be able to use Medicaid cards to qualify for a $5.99-a-month Prime tier.
The Seattle retail giant last year introduced that discounted rate for people who receive government food assistance and have a valid Electronic Benefits Transfer card.
On an annual basis, savings stack up to a 27 percent discount from Amazon’s $99-a-year regular freight in the United States. Monthly subscriptions cost $12.99 a month after a price increase in January.
Amazon’s membership program — which comes with perks such as free two-day shipping and access to streaming video and music services — is a cornerstone of the retailer’s effort to get people to spend more on the site.
Amazon says little about the profile of Prime members. But that group, which Wedbush Securities estimates totals about 100 million people worldwide, is thought to be a relatively affluent slice of the population, particularly in comparison with Amazon rival Walmart.
One Morgan Stanley survey pegged the average annual income of Prime members at $87,000.
By establishing a tier for Medicaid recipients, Amazon adds another entry point to its services to people in lower income brackets.
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Analysts with MoffettNathanson, who periodically survey members of Prime and rival retail membership programs from the likes of Costco and Walmart’s Sam’s Club, found that people with incomes below $45,000 were slightly less likely to renew their Prime membership than higher earners. The portion of people in that bracket who said they intended to renew in a recent survey was still above 90 percent.
Amazon says people interested in the discount will need to upload images of their Medicaid or EBT cards, and will have to prove eligibility annually.
The use of the discount is capped at four years.