Acquired hearing impairment is associated with gradually declining phonological representations. According to the Ease of Language Understanding (ELU) model, poorly defined representations lead to mismatch in phonologically challenging tasks. To resolve the mismatch, reliance on working memory capacity (WMC) increases. This study investigated whether WMC modulated performance in a phonological task in individuals with hearing impairment. A visual rhyme judgment task with congruous or incongruous orthography, followed by an incidental episodic recognition memory task, was used. In participants with hearing impairment, WMC modulated both rhyme judgment performance and recognition memory in the orthographically similar non-rhyming condition; those with high WMC performed exceptionally well in the judgment task, but later recognized few of the words. For participants with hearing impairment and low WMC the pattern was reversed; they performed poorly in the judgment task but later recognized a surprisingly large proportion of the words. Results indicate that good WMC can compensate for the negative impact of auditory deprivation on phonological processing abilities by allowing for efficient use of phonological processing skills. They also suggest that individuals with hearing impairment and low WMC may use a non-phonological approach to written words, which can have the beneficial side effect of improving memory encoding. Learning outcomes: Readers will be able to: (1) describe cognitive processes involved in rhyme judgment, (2) explain how acquired hearing impairment affects phonological processing and (3) discuss how reading strategies at encoding impact memory performance. (Contains 3 tables and 2 figures.)