While it may not be a scam, the purchase of a Medicaid annuity is of no benefit to most people -- especially single people and those with enough money to pay for their own care, like your mother.
Medicaid is basic health insurance for people over 65 years of age who have limited income. To qualify for Medicaid, your parent would have to meet certain income and asset requirements. Medicaid annuities theoretically allow senior citizens to shelter some of their assets in order to qualify for Medicaid coverage of costly long-term care or nursing home expenses.
But these annuities have several drawbacks and benefit few people. It's true that assets held in Medicaid annuities aren't counted against the Medicaid asset limits, but these annuities are irrevocable and once your mother started receiving payments, she couldn't access the principal for any reason -- even if she were to leave the nursing home.
If your mother has retirement and savings accounts, she will most likely be able to afford higher-quality long-term care than Medicaid would provide, assuming she were able to qualify for Medicaid through an annuity or otherwise spending down her assets. Something else to keep in mind: Once your mother began receiving care from a Medicaid facility, whatever income she received from her annuity would go directly to Medicaid.
For some married couples, Medicaid annuities might make sense because, theoretically, one spouse could receive the income from the annuity while the other was in a nursing home facility. But the rules are complicated and vary from state to state, so if you're considering this for your parents, make sure to speak with an independent financial advisor -- not the sales person hawking the annuity -- who understands the pros and cons of these types of financial products before you sign up.