We recently noted a scary full-page "alert" ad targeting annuity owners for a fancy seminar and luncheon.

It's true that if you have an annuity, problems could arise if you need nursing home care and hope to qualify for Medicaid, the state and federally funded program that covers the poor.

The wrong kind of annuity may prevent you from qualifying. On the other hand, certain types of annuities also are used as Medicaid planning tools -- aimed at protecting your assets from the high cost of a nursing home.

To qualify for Medicaid, assets typically must be spent down, generally to about $2,000, depending on state law.

You definitely need to plan for your long-term care as the cost of a nursing home escalates. But elder law attorneys warn against limiting your Medicaid planning to one type of financial instrument. There is no one-size-fits-all approach.

An annuity may be just one of dozens of Medicaid planning tools available to help protect assets in a husband-and-wife situation. The hodgepodge of state and federal rules governing Medicaid is changing faster than even elder law attorneys can track.

"We've had situations where people bought deferred annuities and were denied Medicaid," says Deerfield Beach, Fla., elder law attorney Jerome Ira Solkoff. "We've had situations where people thought they needed immediate annuities and didn't need to have such exotic investments."

There are two major categories of annuities. Deferred annuities let you invest tax-deferred until you decid to take the income. With an immediate annuity, you invest a lump sum and get income for a lifetime.

In most states, an annuity must meet these conditions to be considered an exempt asset for Medicaid:

It must be irrevocable and nonassignable. This means it can't be redeemed or transferred to another party. So all deferred annuities typically are countable as assets for Medicaid. This rule also eliminates some of the newfangled immediate annuities that give you the option to withdraw cash.

The immediate annuity must be "actuarially sound." This means, in effect, it must pay you back the entire purchase cost based on Medicaid life expectancy tables, says Peter Strauss, elder law attorney with Epstein Becker & Green, New York.

Problems may arise with immediate annuities sold with joint and survivor payout benefits, which allow a surviving spouse to continue collecting income for life. Also problematic: Annuities with "period certain options," which designate a beneficiary to collect payouts if the policyholder dies within a specific time frame.

Private annuities also may spell trouble. "States are leaning toward outlawing immediate and deferred annuities if a family member is acting as an insurance company," according to Mr. Solkoff.

Mr. Strauss, the New York attorney, said he's concerned about gift and lifetime annuities sold by charitable organizations. Once you buy an annuity, you're locked in. "If you suddenly find significant health-care expenses and other needs, how do you get your money back?" he said.

Elder law attorneys caution that they often have to undo deferred annuities so that their clients can qualify for Medicaid. This may require that their clients pay steep surrender fees. Or, annuities may be converted to actuarially sound immediate annuities for Medicaid.

Want to run your annuity by an elder law attorney? You can find one locally through the National Academy of Elder Law Attorneys, www.naela.org. Also, check for a "Certified Elder Law Attorney" at The National Elder Law Foundation at www.nelf.org.