BACKGROUND: Effective communications between health care providers and patients are critical for high-quality health care. OBJECTIVE: This study sampled adults age 65 years and older to explore (1) characteristics associated with limited health literacy (LHL) and (2) medical costs and gaps in care based on health literacy, hearing loss, and hearing aid use status. METHODS: The study included 19,223 adults age 65 years and older who completed a health survey that was linked to his or her medical claims that were generated after medical care provided in the year prior to survey completion. Health literacy, hearing loss, and hearing aid use were assessed through self-reports. Health literacy was coded as limited and adequate. Hearing loss and hearing aid use were coded into five categories: no hearing loss, unaided mild, aided mild, unaided severe, and aided severe hearing loss. KEY RESULTS: Seven percent reported LHL and 41% reported hearing loss. Hearing loss, especially unaided severe, was associated with LHL, as were memory loss, depression, loneliness, older age, and male gender. People with aided severe hearing loss and LHL had higher annual medical costs than those with adequate health literacy. Similarly, those with no hearing loss and LHL had higher annual medical costs than those with adequate health literacy. CONCLUSIONS: Unaided mild, aided severe, and unaided severe hearing loss were positively associated with LHL, although the association was reduced among hearing aid users. Specifically, aided mild or severe hearing loss had lower odds of LHL, compared to unaided mild or severe hearing loss, respectively. We also observed that people with both hearing loss and LHL were more likely to have higher medical costs. Continued focus on solutions to address both LHL and hearing loss remains warranted. [HLRP: Health Literacy Research and Practice. 2020;4(2):e129-e137.] PLAIN LANGUAGE SUMMARY: Health survey and medical claims data were used for this study. Hearing loss, especially unaided severe, was associated with limited health literacy, as were memory loss, depression, loneliness, older age, and male gender. Those with both limited health literacy and hearing loss had the highest medical costs. Health literacy and hearing loss can affect health care communications, warranting further study.