Context Elderly patients may have limited ability to read and comprehend medical information pertinent to their health. Objective To determine the prevalence of low functional health literacy among community-dwelling Medicare enrollees in a national managed care organization. Design Cross- sectional survey. Setting Four Prudential HealthCare plans (Cleveland, Ohio; Houston, Tex; south Florida; Tampa, Fla). Participants A total of 3260 new Medicare enrollees aged 65 years or older were interviewed in person between June and December 1997 (853 in Cleveland, 498 in Houston, 975 in south Florida, 934 in Tampa); 2956 spoke English and 304 spoke Spanish as their native language. Main Outcome Measure Functional health literacy as measured by the Short Test of Functional Health Literacy in Adults. Results Overall, 33.9% of English-speaking and 53.9% of Spanish-speaking respondents had inadequate or marginal health literacy. The prevalence of inadequate or marginal functional health literacy among English speakers ranged from 26.8% to 44.0%. In multivariate analysis, study location, race/language, age, years of school completed, occupation, and cognitive impairment were significantly associated with inadequate or marginal literacy. Reading ability declined dramatically with age, even after adjusting for years of school completed and cognitive impairment. The adjusted odds ratio for having inadequate or marginal health literacy was 8.62 (95% confidence interval, 5.55-13.38) for enrollees aged 85 years or older compared with individuals aged 65 to 69 years. Conclusions Elderly managed care enrollees may not have the literacy skills necessary to function adequately in the health care environment. Low health literacy may impair elderly patients' understanding of health messages and limit their ability to care for their medical problems.