The loudness recruitment associated with cochlear hearing loss increases the perceived amount of amplitude modulation (AM), called "fluctuation strength." For normal-hearing (NH) subjects, fluctuation strength "saturates" when the AM depth is high. If such saturation occurs for hearing-impaired (HI) subjects, they may show poorer AM depth discrimination than NH subjects when the reference AM depth is high. To test this hypothesis, AM depth discrimination of a 4-kHz sinusoidal carrier, modulated at a rate of 4 or 16 Hz, was measured in a two-alternative forced-choice task for reference modulation depths, $m$, of 0.5, 0.6, and 0.7. AM detection was assessed using $m$= 0. Ten older HI subjects, and five young and five older NH subjects were tested. Psychometric functions were measured using five target modulation depths for each $m$. For AM depth discrimination, the HI subjects performed more poorly than the NH subjects, both at 30 dB sensation level (SL) and 75 dB sound pressure level (SPL). However, for AM detection, the HI subjects performed better than the NH subjects at 30 dB SL; there was no significant difference between the HI and NH groups at 75 dB SPL. The results for the NH subjects were not affected by age.