Amazon introduces Prime discount for Medicaid recipients

Amazon has been working to offer more services for lower-income shoppers including discounted Prime memberships and Amazon Cash.                  Getty Images

Nonetheless, Amazon will offer Medicaid members a reduced Amazon Prime subscription price.

The discounted program charges eligible customers $5.99 per month, down from the regular monthly price of $12.99, and it comes with free two-day shipping as well as all the benefits like Prime Video, Prime Photos and others. The lowered monthly rate is $27 cheaper than the $99 annual Prime membership fee. Qualified customers would be able to renew their Amazon Prime subscriptions annually at the discounted rate for up to four years, Amazon said.

With these discounted memberships, Amazon threatens to steal low-income customers from Walmart.

"The ability to order things online and have them shipped directly to your door within a quick time frame, people in higher earning demographics have long seen this as a convenience that changes the way they shop", Avi Greengart, an industry analyst with GlobalData, told USA Today.

The move vastly expands the number of people now eligible for that discounted rate, with about 35 million American adults enrolled in Medicaid, the public health insurance program for people with low income.

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About 41 million people receive food stamp benefits, according to November 2017 data, and over 80% of SNAP benefits are redeemed at supermarkets and superstores.

Amazon's blind spot for low-income users has been a benefit to some of its largest competitors who have managed to offer services to recipients of government assistance.

One Morgan Stanley survey pegged the average annual income of Prime members at $87,000.

Through the discounted Prime membership, subscribers gain access to free, two-day shipping on many products sold through Amazon; Prime Video, the company's streaming video platform; Prime Music for streaming music; Prime Photos; Prime Reading; Prime Now; Audible Channels and other features. Prime membership for students is $6.49 a month. He said Prime has helped save her time and money by helping her skip some of those errands.

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