EXHIBIT 10.3










                          SIERRA HEALTH SERVICES, INC.


                           DEFERRED COMPENSATION PLAN


                        Effective May 1, 1996, as Amended
                            and Restated July 1, 1997




























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                                TABLE OF CONTENTS

                                                                           PAGE

Purpose ...................................................................   1

ARTICLE 1         Definitions..............................................   1

ARTICLE 2         Selection, Enrollment, Eligibility.......................   8

         2.1      Selection by Committee...................................   8
         2.2      Enrollment Requirements..................................   8
         2.3      Eligibility; Commencement of Participation...............   8
         2.4      Termination of Participation and/or Deferrals............   8

ARTICLE 3         Deferral Commitments/Company Matching/Crediting/Taxes....   9

         3.1      Minimum Deferral.........................................   9
         3.2      Maximum Deferral.........................................   9
         3.3      Election to Defer; Effect of Election Form...............  10
         3.4      Withholding of Annual Deferral Amounts...................  10
         3.5      Annual Company Matching Amount...........................  10
         3.6      Annual Company Restoration Amount........................  11
         3.7      Vested Company Matching Account, Vested Company
                           Restoration Account, and Deferral Account.......  11
         3.8      Crediting/Debiting of Account Balances...................  12
         3.9      FICA, Withholding and Other Taxes........................  14
         3.10     Rollovers From Prior Deferred Compensation Plan..........  14

ARTICLE 4         Short-Term Payout; Unforeseeable Financial Emergencies;
                           Withdrawal Election.............................  14

         4.1      Short-Term Payout........................................  15
         4.2      Other Benefits Take Precedence Over Short-Term Payout....  15
         4.3      Withdrawal Payout/Suspensions for Unforeseeable 
                       Financial Emergencies...............................  15
         4.4      Withdrawal Election......................................  15

ARTICLE 5         Retirement Benefit.......................................  16

         5.1      Retirement Benefit.......................................  16
         5.2      Payment of Retirement Benefit............................  16
         5.3      Death Prior to Completion of Retirement Benefit..........  16




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ARTICLE 6         Pre-Retirement Survivor Benefit..........................  16

         6.1      Pre-Retirement Survivor Benefit..........................  16
         6.2      Payment of Pre-Retirement Survivor Benefit...............  16

ARTICLE 7         Termination Benefit......................................  17

         7.1      Termination Benefit......................................  17
         7.2      Payment of Termination Benefit...........................  17

ARTICLE 8         Disability Waiver and Benefit............................  17

         8.1      Disability Waiver........................................  17
         8.2      Continued Eligibility; Disability Benefit................  17

ARTICLE 9         Beneficiary Designation..................................  18

         9.1      Beneficiary..............................................  18
         9.2      Beneficiary Designation; Change; Spousal Consent.......... 18
         9.3      Acknowledgment...........................................  18
         9.4      No Beneficiary Designation...............................  19
         9.5      Doubt as to Beneficiary..................................  19
         9.6      Discharge of Obligations.................................  19

ARTICLE 10        Leave of Absence.........................................  19

         10.1     Paid Leave of Absence....................................  19
         10.2     Unpaid Leave of Absence..................................  19

ARTICLE 11        Termination, Amendment or Modification...................  19

         11.1     Termination..............................................  19
         11.2     Amendment................................................  20
         11.3     Plan Agreement...........................................  20
         11.4     Effect of Payment........................................  20

ARTICLE 12        Administration...........................................  21

         12.1     Committee Duties.........................................  21
         12.2     Agents.................................................... 21
         12.3     Binding Effect of Decisions..............................  21
         12.4     Indemnity of Committee...................................  21
         12.5     Employer Information.....................................  21




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ARTICLE 13        Other Benefits and Agreements............................  21

         13.1     Coordination with Other Benefits.........................  21

ARTICLE 14        Claims Procedures........................................  22

         14.1     Presentation of Claim....................................  22
         14.2     Notification of Decision.................................  22
         14.3     Review of a Denied Claim.................................  22
         14.4     Decision on Review.......................................  23
         14.5     Legal Action.............................................  23

ARTICLE 15        Trust....................................................  23

         15.1     Establishment of the Trust...............................  23
         15.2     Interrelationship of the Plan and the Trust..............  23
         15.3     Distributions From the Trust.............................  23

ARTICLE 16        Miscellaneous............................................  24

         16.1     Unsecured General Creditor...............................  24
         16.2     Employer's Liability.....................................  24
         16.3     Nonassignability.........................................  24
         16.4     Not a Contract of Employment.............................  24
         16.5     Furnishing Information..................................   24
         16.6     Terms....................................................  24
         16.7     Captions.................................................  25
         16.8     Governing Law............................................  25
         16.9     Notice...................................................  25
         16.10    Successors...............................................  25
         16.11    Spouse's Interest........................................  25
         16.12    Validity.................................................  25
         16.13    Incompetent..............................................  26
         16.14    Court Order..............................................  26
         16.15    Distribution in the Event of Taxation....................  26
         16.16    Legal Fees To Enforce Rights After Change in Control.....  26


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                          SIERRA HEALTH SERVICES, INC.

                           DEFERRED COMPENSATION PLAN

                        Effective May 1, 1996, as Amended
                            and Restated July 1, 1997


                                     Purpose

                  The purpose of this Plan is to provide specified benefits to a
select  group of  management  or highly  compensated  Employees  who  contribute
materially to the continued  growth,  development and future business success of
the Sierra Health  Services,  Inc., a Nevada  corporation,  and its subsidiaries
(including lower-tier  subsidiaries),  if any, that sponsor this Plan. This Plan
shall be unfunded for tax purposes and for purposes of Title I of ERISA.

                                    ARTICLE 1
                                   Definitions

                  For purposes hereof,  unless  otherwise  clearly apparent from
the context,  the following phrases or terms shall have the following  indicated
meanings:

1.1      "Account Balance" shall mean, with respect to a Participant, the sum of
         (i) the Deferral  Account plus (ii) the Vested Company Matching Account
         plus (iii) the Vested Company Restoration  Account.  This account shall
         be a  bookkeeping  entry only and shall be utilized  solely as a device
         for the  measurement and  determination  of the amounts to be paid to a
         Participant pursuant to this Plan.

1.2      "Annual Bonus" shall mean any annual cash  compensation  in addition to
         Base Annual Salary relating to services  performed  during any calendar
         year,  whether or not paid in such  calendar  year or  included  on the
         Federal  Income  Tax Form  W-2 for such  calendar  year,  payable  to a
         Participant  as an  Employee  under  any  Employer's  annual  bonus and
         incentive  plans,  including  any such  bonuses  payable  to  physician
         employees.

1.3      "Annual  Company  Matching  Amount"  for any one Plan Year shall be the
         amount determined in accordance with Section 3.5.

1.4      "Annual Company  Restoration Amount" for any one Plan Year shall be the
         amount determined in accordance with Section 3.6.

1.5      "Annual  Deferral  Amount"  shall mean that portion of a  Participant's
         Base Annual Salary  and/or  Annual Bonus that a  Participant  elects to
         have, and is,  deferred in accordance  with Article 3, for any one Plan
         Year.  In the  event  of a  Participant's  Retirement,  Disability  (if
         deferrals cease in accordance with Section 8.1), death or a Termination
         of  Employment  prior to the end of a Plan  Year,  such  year's  Annual
         Deferral  Amount  shall be the  actual  amount  withheld  prior to such
         event.

1.6      "Base Annual Salary" shall mean the annual cash  compensation  relating
         to services  performed during any calendar year, whether or not paid in
         such calendar  year or included on the Federal  Income Tax Form W-2 for
         such calendar year  including  bonuses  (other than the Annual  Bonus),
         commissions, and overtime, but excluding relocation expenses, incentive
         payments,  non-monetary awards, fringe benefits,  retainers,  directors
         fees and other fees,  severance  allowances,  pay in lieu of vacations,
         insurance premiums paid by an Employer, insurance


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SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan


         benefits paid to the  Participant or his or her  beneficiary,  Employer
         contributions  to qualified or  nonqualified  plans and  automobile and
         other allowances paid to a Participant for employment services rendered
         (whether or not such  allowances are included in the  Employee's  gross
         income).  Base Annual Salary shall be calculated  before  reduction for
         compensation  voluntarily  deferred or contributed  by the  Participant
         pursuant  to  all  qualified  or  non-qualified   plans  and  shall  be
         calculated   to  include   amounts  not   otherwise   included  in  the
         Participant's  gross  income under Code  Sections  125,  402(e)(3),  or
         402(h) pursuant to plans established by any Employer;  provided however
         that all such  amounts  will be  included in  compensation  only to the
         extent  that,  had there been no such plan,  the amount would have been
         payable in cash to the Employee.

1.7      "Beneficiary" shall mean one or more persons,  trusts, estates or other
         entities, designated in accordance with Article 9, that are entitled to
         receive benefits under this Plan upon the death of a Participant.

1.8      "Beneficiary  Designation  Form" shall mean the form,  established from
         time to time by the Committee, that a Participant completes,  signs and
         returns to the Committee to designate one or more Beneficiaries.

1.9      "Board" shall mean the board of directors of the Company.

1.10     "Change in Control" shall mean a transaction  or event in which,  after
         the  effective  date  of the  Plan,  (i) the  Company  shall  merge  or
         consolidate  with any other  corporation and shall not be the surviving
         corporation;  (ii) the Company shall transfer all or substantially  all
         of its  assets to any other  person;  or (iii) any  person  shall  have
         become the  beneficial  owner of more than 50% of the  voting  power of
         outstanding voting securities of the Company.

1.11     "Claimant" shall have the meaning set forth in Section 14.1.


     1.12 "Code"  shall mean the  Internal  Revenue  Code of 1986,  as it may be
amended from time to time.

1.13     "Committee" shall mean the committee described in Article 12.

     1.14  "Company"  shall  mean  Sierra  Health   Services,   Inc.,  a  Nevada
corporation.

     1.15  "Company   Matching   Account"  shall  mean  the  sum  of  all  of  a
Participant's  Annual Company Matching Amounts plus amounts credited and debited
in accordance  with all the applicable  crediting  provisions of this Plan, less
all distributions made to the Participant or his or her Beneficiary  pursuant to
this Plan that relate to his or her Company Matching Account. This account shall
be a  bookkeeping  entry only and shall be  utilized  solely as a device for the
measurement  and  determination  of the  amounts  to be paid to the  Participant
pursuant to this Plan.

                                                         2

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SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan



1.16     "Company   Restoration  Account"  shall  mean  the  sum  of  all  of  a
         Participant's  Annual Company Restoration Amounts plus amounts credited
         and debited in  accordance  with all the  applicable  provisions of the
         Plan,  less all  distributions  made to the  Participant  or his or her
         Beneficiary  pursuant  to the Plan that  relate  to his or her  Company
         Restoration Account. This account shall be a bookkeeping entry only and
         shall  be  utilized   solely  as  a  device  for  the  measurement  and
         determination of the amounts to be paid to the Participant  pursuant to
         this Plan.

1.17     "Deferral Account" shall mean the sum of all of a Participant's  Annual
         Deferral Amounts,  plus amounts credited and debited in accordance with
         all the applicable  provisions of the Plan, less all distributions made
         to the Participant or his or her Beneficiary  pursuant to the Plan that
         relate  to  his  or her  Deferral  Account.  This  account  shall  be a
         bookkeeping entry only and shall be utilized solely as a device for the
         measurement  and  determination  of  the  amounts  to be  paid  to  the
         Participant pursuant to this Plan.

1.18     "Deduction Limitation" shall mean the following described limitation on
         a  benefit  that  may  otherwise  be  distributable   pursuant  to  the
         provisions of this Plan. Except as otherwise provided,  this limitation
         shall  be  applied  to  all  distributions  that  are  "subject  to the
         Deduction  Limitation"  under this Plan.  If an Employer  determines in
         good  faith  prior to a Change in Control  that  there is a  reasonable
         likelihood  that any  compensation  paid to a Participant for a taxable
         year of the Employer would not be deductible by the Employer  solely by
         reason of the limitation under Code Section 162(m),  then to the extent
         deemed  necessary by the  Employer to ensure that the entire  amount of
         any distribution to the Participant  pursuant to this Plan prior to the
         Change in  Control is  deductible,  the  Employer  may defer all or any
         portion  of a  distribution  under  this  Plan.  Any  amounts  deferred
         pursuant  to  this  limitation  shall  be  credited  and  debited  with
         additional  amounts in accordance with Section 3.8 below,  even if such
         amount is being  paid out in  installments.  The  amounts  so  deferred
         adjusted  to reflect  amounts  credited  and debited  thereon  shall be
         distributed to the  Participant or his or her Beneficiary (in the event
         of  the  Participant's   death)  at  the  earliest  possible  date,  as
         determined by the Employer in good faith, on which the deductibility of
         compensation paid or payable to the Participant for the taxable year of
         the Employer during which the  distribution is made will not be limited
         by Section  162(m),  or if earlier,  the effective  date of a Change in
         Control.  Notwithstanding  anything to the  contrary in this Plan,  the
         Deduction  Limitation shall not apply to any distributions made after a
         Change in Control.

1.19     "Disability"   shall  mean  a  period  of  disability  during  which  a
         Participant  qualifies for disability  benefits under the Participant's
         Employer's  long-term  disability  plan, or, if a Participant  does not
         participate  in such a plan,  a period of  disability  during which the
         Participant  would have qualified for disability  benefits under such a
         plan  had  the  Participant  been a  participant  in  such a  plan,  as
         determined   in  the  sole   discretion  of  the   Committee.   If  the
         Participant's Employer does not sponsor such a plan, or discontinues to
         sponsor such a plan, Disability shall be determined by the Committee in
         its sole discretion.

1.20     "Disability Benefit" shall mean the benefit set forth in Article 8.

1.21     "Election  Form" shall mean the form  established  from time to time by
         the Committee  that a Participant  completes,  signs and returns to the
         Committee to make an election under the Plan.

1.22     "Employee" shall mean a person who is an employee of any Employer.

                                                         3

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SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan



1.23     "Employer(s)"  shall mean the  Company  and/or any of its  subsidiaries
         (now in  existence  or  hereafter  formed or  acquired)  that have been
         selected by the Board to  participate  in the Plan and have adopted the
         Plan.

1.24     "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
         as amended from time to time.

1.25     "401(k) Plan" shall be that certain Sierra Health Services, Inc. Profit
         Sharing/401(k)  Plan & Trust,  dated January 1, 1989 and adopted by the
         Company.

     1.26 "Monthly  Installment  Method" shall be an installment  payment method
over the duration  selected by the  Participant  in  accordance  with this Plan,
calculated as follows: The Participant's  Account Balance, as of the date of the
Participant's Retirement,  death, Disability or Termination of Employment, shall
be multiplied by a fraction,  the numerator of which is 1 and the denominator of
which is the number of  periods  over which the  installment  payments  shall be
paid. The result of this multiplication  shall be the amount of each installment
payment for the Plan Year in which the  Participant  Retired,  died,  suffered a
Disability or  experienced a Termination  of Employment and this amount shall be
paid  starting  on the  first  day  of the  month  following  the  Participant's
Retirement, death, Disability or Termination of Employment and shall continue to
be paid on the first day of each month  thereafter  during  that Plan Year.  For
each  subsequent  Plan  Year  during  the   installment   payment  period,   the
Participant's  Account  Balance shall be determined as of January 1 of that Plan
Year,  in  accordance  with Section 3.8,  after taking into account all previous
installment  payments,  and such  balance  shall be  multiplied  by the fraction
described  above,  except that the denominator  shall be the number of remaining
periods over which the installment payments are to be paid. The resulting amount
shall be the amount of each installment  payment for the Plan Year, which amount
shall  be paid on the  first  day of each  month  during  the  Plan  Year.  If a
Participant  has a  positive  Account  Balance  after  the  end of  the  elected
installment  payment  period,  the remaining  Account Balance shall be paid in a
lump sum on the  first  day of the  month  following  the  month  in  which  the
installment  period  ends.  If  any  installment,  if  paid,  would  reduce  the
Participant's  Account Balance to zero or below, that installment  payment shall
be reduced so that the Participant's  Account Balance does not go below zero and
all future installment payments shall cease.

1.27     "Participant"   shall  mean  any   Employee  (i)  who  is  selected  to
         participate  in the Plan,  (ii) who elects to  participate in the Plan,
         (iii) who signs a Plan  Agreement,  an Election  Form and a Beneficiary
         Designation  Form, (iv) whose signed Plan Agreement,  Election Form and
         Beneficiary  Designation  Form are accepted by the  Committee,  (v) who
         commences  participation in the Plan, and (vi) whose Plan Agreement has
         not terminated. A spouse or former spouse of a Participant shall not be
         treated as a Participant in the Plan, even if he or she has an interest
         in the Participant's benefits under the Plan under applicable law or as
         a result of property  settlements  resulting  from legal  separation or
         divorce.

1.28     "Plan" shall mean the Company's Deferred Compensation Plan, which shall
         be evidenced by this instrument and by each Plan Agreement, as they may
         be amended from time to time.

1.29     "Plan Agreement" shall mean a written agreement, as may be amended from
         time to time,  which is entered  into by and between an Employer  and a
         Participant.  The terms of any Plan Agreement may vary any of the terms
         set forth in this Plan and such changes shall be binding

                                                         4

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SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan


         on the Employer and the  Participant if the Plan Agreement is signed by
         the  Participant  and  accepted  by the  Employer.  The Plan  Agreement
         executed by a  Participant  and accepted by the Employer  shall provide
         for the entire benefit to which such  Participant is entitled under the
         Plan; should there be more than one Plan Agreement,  the Plan Agreement
         bearing the latest date of acceptance by the Employer  shall  supersede
         all previous  Plan  Agreements  in their  entirety and shall govern the
         agreement between the parties.

1.30     "Plan Year"  shall,  for the first Plan Year,  begin on May 1, 1996 and
         end on December 31, 1996. For each Plan Year thereafter,  the Plan Year
         shall begin on January 1 of each year and continue through December 31.

     1.31 "Pre-Retirement  Survivor Benefit" shall mean the benefit set forth in
Article 6.

1.32     "Retirement,"  "Retire(s)" or "Retired"  shall mean, with respect to an
         Employee,  severance from  employment from all Employers for any reason
         other  than a leave of  absence,  death or  Disability  on or after age
         sixty-five  (65) or on or after age fifty-five (55) with ten (10) Years
         of Service.

1.33     "Retirement Benefit" shall mean the benefit set forth in Article 5.

1.34     "Short-Term Payout" shall mean the payout set forth in Section 4.1.

1.35     "Termination Benefit" shall mean the benefit set forth in Article 7.

1.36     "Termination  of Employment"  shall mean the ceasing of employment with
         all Employers,  voluntarily or involuntarily, for any reason other than
         Retirement, Disability, death or an authorized leave of absence.

1.37     "Trust"  shall  mean the trust  established  pursuant  to that  certain
         Master Trust Agreement, dated as of May 1, 1996 between the Company and
         the trustee named therein, as amended from time to time.

1.38     "Unforeseeable   Financial   Emergency"  shall  mean  an  unanticipated
         emergency  that  is  caused  by an  event  beyond  the  control  of the
         Participant  that  would  result in severe  financial  hardship  to the
         Participant  resulting  from (i) a sudden  and  unexpected  illness  or
         accident of the Participant or a dependent of the  Participant,  (ii) a
         loss of the Participant's property due to casualty, or (iii) such other
         extraordinary  and unforeseeable  circumstances  arising as a result of
         events beyond the control of the Participant,  all as determined in the
         sole discretion of the Committee.

1.39     "Unvested  Accrued  Amounts"  shall  mean the  part of a  Participant's
         Company Matching Account and Company  Restoration  Account which is not
         vested under Section 3.7.

     1.40 "Vested Company Matching  Account" shall have the meaning set forth in
Section 3.7.

     1.41 "Vested Company Restoration  Account" shall have the meaning set forth
in Section 3.7.


                                                         5

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SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan


1.42     "Years of Service" shall mean the total number of full years in which a
         Participant has been employed by one or more Employers. For purposes of
         this definition, a year of employment shall be a 365 day period (or 366
         day  period in the case of a leap  year)  that,  for the first  year of
         employment,  commences on the  Employee's  date of hiring and that, for
         any subsequent  year,  commences on an anniversary of that hiring date.
         Any partial year of employment shall not be counted.

                                    ARTICLE 2
                       Selection, Enrollment, Eligibility

2.1      SELECTION BY COMMITTEE. Participation in the Plan shall be limited to a
         select  group of  management  or highly  compensated  Employees  of the
         Employers, as determined by the Committee in its sole discretion.  From
         that  group,  the  Committee  shall  select,  in its  sole  discretion,
         Employees to participate in the Plan.

2.2      ENROLLMENT REQUIREMENTS. As a condition to participation, each selected
         Employee shall complete, execute and return to the Committee, within 30
         days of selection, a Plan Agreement, an Election Form and a Beneficiary
         Designation Form. In addition,  the Committee shall establish from time
         to time such other enrollment requirements as it determines in its sole
         discretion are necessary.

2.3      ELIGIBILITY;   COMMENCEMENT  OF  PARTICIPATION.  Provided  an  Employee
         selected to participate in the Plan has met all enrollment requirements
         set  forth  in this  Plan  and  required  by the  Committee,  including
         returning  all required  documents to the  Committee  within 30 days of
         selection,  that Employee shall commence  participation in the Plan (i)
         in the case of  Participants  meeting all  enrollment  requirements  by
         April 30 of the first  Plan Year,  as of May 1,  1996;  and (ii) in all
         other  cases,  on the January 1 or July 1 following  the month in which
         the Employee  completes  all  enrollment  requirements.  If an Employee
         fails to meet all such requirements  within the required 30 day period,
         that Employee  shall not be eligible to  participate  in the Plan until
         the first day of the Plan Year following the delivery to and acceptance
         by the Committee of the required documents.

2.4      TERMINATION  OF  PARTICIPATION  AND/OR  DEFERRALS.   If  the  Committee
         determines  in good faith that a Participant  no longer  qualifies as a
         member of a select group of management or highly compensated employees,
         as membership  in such group is determined in accordance  with Sections
         201(2),  301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the
         right, in its sole discretion,  to (i) terminate any deferral  election
         the Participant  has made for the Plan Year in which the  Participant's
         membership  status changes,  (ii) prevent the  Participant  from making
         future  deferral  elections  and/or (iii)  immediately  distribute  the
         Participant's then Account Balance, determined as if there has occurred
         a   Termination   of  Employment   and   terminate  the   Participant's
         participation  in the Plan. If the  Committee  chooses to terminate the
         Participant's participation in the Plan, the Committee may, in its sole
         discretion,  reinstate the  Participant to full Plan  participation  at
         such time in the future as the  Participant  again  becomes a member of
         the select group described above.

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SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan


                                    ARTICLE 3
              Deferral Commitments/Company Matching/Crediting/Taxes

3.1      MINIMUM DEFERRAL.

         (a)      MINIMUM. For each Plan Year, a Participant may elect to defer,
                  as his or her Annual Deferral Amount, a minimum of $2,000 from
                  either his or her Base Annual  Salary or Annual  Bonus.  If an
                  election is made for less than the stated minimum  amount,  or
                  if no election is made, the amount deferred shall be zero.

         (b)      SHORT PLAN YEAR. If a Participant  first becomes a Participant
                  after  the  first  day of a Plan  Year,  or in the case of the
                  first Plan Year of the Plan itself, the minimum deferral shall
                  be an amount equal to the minimum set forth above,  multiplied
                  by a  fraction,  the  numerator  of  which  is the  number  of
                  complete months remaining in the Plan Year and the denominator
                  of which is 12.

3.2      MAXIMUM DEFERRAL.

         (a)      MAXIMUM. For each Plan Year, a Participant may elect to defer,
                  as his or her  Annual  Deferral  Amount,  Base  Annual  Salary
                  and/or  Annual Bonus up to the following  maximum  percentages
                  for each deferral elected:

                                                              Maximum
                  Deferral                                    Amount

                  Base Annual Salary                          90%
                  Annual Bonus                       90%

         (b)      SHORT PLAN YEAR. If a Participant  first becomes a Participant
                  after  the  first  day of a Plan  Year,  or in the case of the
                  first Plan Year itself, for such Plan Year only, a Participant
                  may elect to defer, as his or her Annual Deferral Amount, Base
                  Annual  Salary  and/or Annual Bonus that accrue after the date
                  of entry into the Plan, a dollar  amount up to an amount equal
                  to the limits set forth in Section 3.2(a) above  multiplied by
                  such  Participant's  total amount of Base Annual Salary and/or
                  Annual Bonus for the entire Plan Year.

3.3      ELECTION TO DEFER; EFFECT OF ELECTION FORM.

         (a)      FIRST  PLAN  YEAR.   In   connection   with  a   Participant's
                  commencement  of  participation  in the Plan, the  Participant
                  shall make an irrevocable  deferral election for the Plan Year
                  in which the Participant commences  participation in the Plan,
                  along  with  such  other  elections  as  the  Committee  deems
                  necessary or desirable  under the Plan. For these elections to
                  be valid,  the Election  Form must be completed  and signed by
                  the  Participant,   timely  delivered  to  the  Committee  (in
                  accordance  with  Section  2.3  above),  and  accepted  by the
                  Committee.

     (b) SUBSEQUENT  PLAN YEARS.  For each  succeeding Plan Year, an irrevocable
deferral  election for that Plan Year, and such other elections as the Committee
deems

                                                         7

<PAGE>


SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan


                  necessary or desirable under the Plan, shall be made by timely
                  delivering to the Committee,  in accordance with its rules and
                  procedures, before the end of the Plan Year preceding the Plan
                  Year for which the election is made, a new Election  Form.  If
                  no  Election  Form is timely  delivered  for a Plan  Year,  no
                  Annual Deferral Amount shall be withheld for that Plan Year.

3.4      WITHHOLDING OF ANNUAL  DEFERRAL  AMOUNTS.  For each Plan Year, the Base
         Annual Salary portion of the Annual  Deferral  Amount shall be withheld
         in equal  amounts  from each  regularly  scheduled  Base Annual  Salary
         payroll.  The Annual Bonus portion of the Annual  Deferral Amount shall
         be withheld at the time the Annual Bonus is or otherwise  would be paid
         to the  Participant,  whether or not this  occurs  during the Plan Year
         itself.

     3.5  ANNUAL  COMPANY  MATCHING  AMOUNT.  If,  and only  if,  a  Participant
participates  in the 401(k) Plan  ------------------------------  to the maximum
extent  possible under the limits  applicable to the Plan for the Plan Year, the
Participant's  Annual Company  Matching Amount for such Plan Year shall be equal
to 50% of the Participant's  Annual Deferral Amount for such Plan Year, up to an
amount  that does not exceed the lesser of 5% of the  Participant's  Base Annual
Salary  or 50% of the IRC  402(g)(i)  limit in the  effect  for the  Plan  Year,
reduced by the amount of any Company matching  contributions  made to the 401(k)
Plan on his or her behalf for the plan year of the 401(k) Plan that  corresponds
to the Plan Year.  The Annual Company  Matching  Amount shall be credited to the
Participant's  Company  Matching  Account as of the first day of February of the
Plan Year  following  the Plan  Year to which it  relates.  Notwithstanding  the
above,  if a Participant  is not employed by an Employer as of the last day of a
Plan Year other than by reason of his or her  Retirement,  Disability  or death,
the Annual  Company  Matching  Amount  for such Plan Year shall be zero.  In the
event of Retirement,  Disability or death, a Participant  shall be credited with
the Annual Company Matching Amount for the Plan Year in which he or she Retires,
dies or becomes disabled.

3.6      ANNUAL COMPANY  RESTORATION  AMOUNT.  The Participant's  Annual Company
         Restoration  Amount for each Plan Year beginning on or after January 1,
         1997 shall be equal to the amount of employer  contributions other than
         matching contributions under the 401(k) Plan which would have been made
         on the Participant's behalf and allocated to the Participant's  account
         on or  after  July 1,  1997  for  such  Plan  Year  but for one or more
         limitations imposed by the 401(k) Plan pursuant to the Code,  including
         but not limited to any such amounts  resulting from the  application of
         the compensation  limitations  contained in Code Section  401(a)(17) or
         the  limitations  contained  in Code  Section 415. For purposes of this
         Section  3.6,  employer  contributions  under the 401(k)  Plan  exclude
         contributions resulting from the cash or deferred arrangement under the
         401(k) Plan but include  contributions  resulting from the reallocation
         of prior  employer  contributions  (other than matching  contributions)
         forfeited  by  other  401(k)  Plan  participants.  The  Annual  Company
         Restoration  Amount  shall be  credited  to the  Participant's  Company
         Restoration  Account  as of the date or dates such  amounts  would have
         been allocated to the Participant's account(s) under the 401(k) Plan if
         such  amounts had in fact been  allocated  under the 401(k)  Plan.  The
         foregoing  notwithstanding  the above, if a Participant is not employed
         by an  Employer  as of the last day of a Plan Year other than by reason
         of his or her  Retirement,  Disability  or death,  the  Annual  Company
         Restoration  Amount for such Plan Year  shall be zero.  In the event of
         Retirement,  Disability or death, a Participant  shall be credited with
         the Annual Company  Restoration Amount for the Plan Year in which he or
         she

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SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan


         Retires,  dies or becomes disabled.  The  Participant's  Annual Company
         Restoration  Amount for each Plan Year prior to the Plan Year beginning
         January 1, 1997 shall be zero.

3.7      VESTED COMPANY MATCHING ACCOUNT, VESTED COMPANY RESTORATION ACCOUNT AND
         DEFERRAL  ACCOUNT.  With respect to all benefits  under this Plan other
         than the Termination  Benefit, a Participant's  Vested Company Matching
         Account shall equal 100% of such Participant's Company Matching Account
         and a Participant's Vested Company Restoration Account shall equal 100%
         of such Participant's  Company Restoration Account. With respect to the
         Termination  Benefit,  a  Participant's  Company  Matching  Account and
         Company   Restoration   Account   shall   vest  on  the  basis  of  the
         Participant's Years of Service at the time the Participant  experiences
         a Termination of Employment, in accordance with the following schedule:
<TABLE>
<CAPTION>

                                                              Vested Percentage of
         Years of Service at Date of                          Company Matching Account and
         TERMINATION OF EMPLOYMENT                            COMPANY RESTORATION ACCOUNT



<S>                <C>                                                     <C>
         Less than 2 years                                                 0%
         2 years or more, but less than 3                                  20%
         3 years or more, but less than 4                                  40%
         4 years or more, but less than 5                                  60%
         5 years or more, but less than 6                                  80%
         6 years or more                                                   100%
</TABLE>

         Notwithstanding  the above,  after a Change in Control, a Participant's
         Vested Company Matching Account shall equal 100% of such  Participant's
         Company Matching Account and a Participant's Vested Company Restoration
         Account  shall  equal 100% of such  Participant's  Company  Restoration
         Account. A Participant's Deferral Account shall always be 100% vested.

3.8      CREDITING/DEBITING OF ACCOUNT BALANCES. In accordance with, and subject
         to, the rules and procedures that are established  from time to time by
         the  Committee,  in its sole  discretion,  amounts shall be credited or
         debited to a Participant's  Account  Balance (and to the  Participant's
         Unvested Accrued Amounts) in accordance with the following rules:

     (a) ELECTION OF MEASUREMENT FUNDS. A Participant, in connection with his or
her initial  -----------------------------  deferral election in accordance with
Section 3.3(a) above, shall elect, on the Election Form, one or more Measurement
Fund(s) (as  described  in Section  3.8(c)  below) to be used to  determine  the
additional  amounts to be credited or debited to his or her Account Balance (and
Unvested  Accrued  Amounts)  from the date on which  the  Participant  commences
participation  in  the  Plan  and  continuing  thereafter,   unless  changed  in
accordance  with the next  sentence.  Commencing  with the  January  1 or July 1
("Investment  Election  Date") that follows the  Participant's  commencement  of
participation in the Plan and on each subsequent Investment Election Date during
which the Participant  participates in the Plan, no later than the day before an
Investment Election Date, the Participant may (but is not required to) elect, by
submitting an Election Form to the Committee  that is accepted by the Committee,
to add or delete one or more  Measurement  Fund(s) to be used to  determine  the
amounts to be credited or debited to his or her Account  Balance  (and  Unvested
Accrued  Amounts),  or to change the portion of his or her Account  Balance (and
Unvested

                                                         9

<PAGE>


SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan


                  Accrued Amounts) allocated to each previously or newly elected
                  Measurement  Fund. If an election is made in  accordance  with
                  the previous  sentence,  it shall apply to the next Investment
                  Election  Date and  continue  thereafter,  unless  changed  in
                  accordance  with the previous  sentence.  Notwithstanding  the
                  foregoing,  the  maximum  transfer  that may be made  from the
                  Declared Rate Measurement Fund to another  Measurement Fund in
                  any one Plan Year cannot exceed 20% of the maximum  balance in
                  the  Participant's  account in the Declared  Rate  Measurement
                  Fund in the current Plan Year and the four prior Plan Years.

         (b)      PROPORTIONATE  ALLOCATION. In making any election described in
                  Section  3.8(a) above,  the  Participant  shall specify on the
                  Election Form, in whole percentage points (1%), the percentage
                  of his or her Account Balance (and Unvested  Accrued  Amounts)
                  to be allocated to a Measurement  Fund (as if the  Participant
                  was making an  investment in that  Measurement  Fund with that
                  portion of his or her  Account  Balance and  Unvested  Accrued
                  Amounts).

     (c) MEASUREMENT  FUNDS.  The Participant may elect one or more  measurement
funds,  -----------------  based  on  certain  mutual  funds  (the  "Measurement
Funds"),  for the purpose of crediting or debiting amounts to his or her Account
Balance (and Unvested  Accrued  Amounts).  The Committee shall select the mutual
funds that are to be used as Measurement Funds. As necessary, the Committee may,
in its sole discretion, discontinue, substitute or add a Measurement Fund at any
time.  Each such  action  will take  effect as of the first day of the  calendar
quarter  that follows by thirty (30) days the day on which the  Committee  gives
Participants advance written notice of such change. In addition, a Declared Rate
Measurement Fund shall be maintained under which interest shall be credited at a
rate as specified by the Company on the November 1 of the year prior to the Plan
Year for which the amount of  interest  is being  determined.  In the first Plan
Year, the rate of interest on the Declared Rate  Measurement Fund shall be equal
to 8.75%.

     (d)  CREDITING  OR  DEBITING  METHOD.  The  performance  of  each  selected
Measurement Fund ---------------------------- (either positive or negative) will
be determined by the Committee in its sole  discretion  based on the performance
of the  Measurement  Funds  themselves  or,  in the  case of the  Declared  Rate
Measurement  Fund, based on the amount of accrued interest credited to the fund.
A Participant's Account Balance (and Unvested Accrued Amounts) shall be credited
or debited based on such  performance of the Measurement  Funds as determined by
the Committee in its sole discretion.  As of each Investment  Election Date, the
Committee shall  distribute to the  Participants a statement of their respective
Account Balances (and Unvested Accrued Amounts).  Furthermore, in the event of a
Participant's   termination  of  employment  or  any  other  event  requiring  a
determination  of the  Participant's  Benefit  or the  value of a  Participant's
Account  Balance,   the  Account  Balance  shall  be  determined  based  on  the
performance of the relevant Measurement Fund(s) through the last date of the pay
period  during  which  the  event  occurs  and  shall  not be  further  adjusted
thereafter.

     (e) NO ACTUAL INVESTMENT.  Notwithstanding any other provision of this Plan
that may be interpreted to the contrary,  the  Measurement  Funds are to be used
for  measurement  purposes  only,  and a  Participant's  election  of  any  such
Measurement Fund, the

                                                        10

<PAGE>


SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan


                  allocation to his or her Account Balance (and Unvested Accrued
                  Amounts)  thereto,  the calculation of additional  amounts and
                  the  crediting or debiting of such amounts to a  Participant's
                  Account  Balance (and Unvested  Accrued  Amounts) shall not be
                  considered or construed in any manner as an actual  investment
                  of his or her Account Balance (or Unvested Accrued Amounts) in
                  any such  Measurement  Fund.  In the event that the Company or
                  the Trustee (as that term is defined in the Trust), in its own
                  discretion,  decides  to  invest  funds  in  any or all of the
                  Measurement  Funds, no Participant shall have any rights in or
                  to  such   investments   themselves.   Without   limiting  the
                  foregoing,  a  Participant's  Account  Balance  (and  Unvested
                  Accrued  Amounts)  shall at all times be a  bookkeeping  entry
                  only and shall not represent any investment made on his or her
                  behalf by the Company or the Trust;  the Participant  shall at
                  all times remain an unsecured creditor of the Company.

3.9      FICA,  WITHHOLDING  AND  OTHER  TAXES.  For each  Plan Year in which an
         Annual Deferral Amount is being withheld or an Annual Company  Matching
         Amount  or  Annual  Company   Restoration   Amount  is  credited  to  a
         Participant,  the  Participant's  Employer(s)  shall withhold from that
         portion of the  Participant's  Base Annual  Salary  and/or Annual Bonus
         that is not being deferred,  in a manner determined by the Employer(s),
         the  Participant's  share  of  FICA  and  other  employment  taxes.  If
         necessary,  the Committee  shall reduce the Annual  Deferral  Amount in
         order to comply with this Section 3.9. In addition,  the  Participant's
         Employer(s)  or the Trust,  shall  withhold from any payments made to a
         Participant  under  this Plan all  federal,  state  and  local  income,
         employment and other taxes  required to be withheld in connection  with
         such payments,  in amounts and in a manner to be determined in the sole
         discretion of the Employer(s) or the Trust.

3.10     ROLLOVERS  FROM PRIOR  DEFERRED  COMPENSATION  PLAN. A Participant  who
         participated in the Company's prior nonqualified  deferred compensation
         plan shall  have the  right,  under such rules and at such times as are
         prescribed  by the  Committee,  to  roll  over  the  benefit  that  the
         Participant is entitled to receive pursuant to such prior  nonqualified
         deferred  compensation  plan so that  such  amount  shall  be held  and
         administered  pursuant  to the terms of this Plan and shall be received
         at the same time that benefits are received pursuant to this Plan.

                                    ARTICLE 4
             Short-Term Payout; Unforeseeable Financial Emergencies;
                               Withdrawal Election

4.1      SHORT-TERM  PAYOUT. In connection with each election to defer an Annual
         Deferral   Amount,   a  Participant  may  elect  to  receive  a  future
         "Short-Term  Payout" from the Plan with respect to that Annual Deferral
         Amount.  Subject to the Deduction  Limitation,  the  Short-Term  Payout
         shall be a lump sum  payment  in an amount  that is equal to the Annual
         Deferral Amount plus amounts credited or debited in the manner provided
         in  Section  3.8 above on that  amount,  determined  at the time of the
         Short-Term  Payout  becomes  payable.  Subject  to the other  terms and
         conditions of this Plan, each Short-Term  Payout elected shall be paid,
         subject to the Deduction Limitation, within 60 days of the first day of
         the Plan Year  that is at least  four  years  after the last day of the
         Plan Year in which the Annual Deferral Amount is actually deferred.  By
         way of example,  if a Short-Term Payout is elected for amounts that are
         deferred in the Plan Year  commencing  January 1, 1997,  the Short-Term
         Payout becomes payable within 60 days of January 1, 2002.


                                                        11

<PAGE>


SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan


4.2      OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM PAYOUT.  Should an event
         occur that triggers a benefit  under  Articles 5, 6, 7 or 8, any Annual
         Deferral  Amount,  plus amounts  credited or debited  thereon,  that is
         subject to a Short-Term  Payout election under Section 4.1 shall not be
         paid in  accordance  with  Section 4.1 but shall be paid in  accordance
         with the other applicable Article.

     4.3 WITHDRAWAL  PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES.
If                                the                                Participant
---------------------------------------------------------------------
experiences an Unforeseeable  Financial Emergency,  the Participant may petition
the Committee to (i) suspend any deferrals  required to be made by a Participant
and/or (ii) receive a partial or full payout from the Plan. The payout shall not
exceed the lesser of the  Participant's  Account Balance,  calculated as if such
Participant  were  receiving a  Termination  Benefit,  or the amount  reasonably
needed to satisfy the Unforeseeable Financial Emergency. If, subject to the sole
discretion  of the  Committee,  the petition for a suspension  and/or  payout is
approved,  suspension shall take effect upon the date of approval and any payout
shall be made within 60 days of the date of approval.  The payment of any amount
under this Section 4.3 shall not be subject to the Deduction Limitation.

     4.4 WITHDRAWAL  ELECTION. A Participant may elect, at any time, to withdraw
all of his or her Account  Balance,  less a withdrawal  penalty  equal to 10% of
such amount (the net amount  shall be referred to as the  "Withdrawal  Amount").
This election can be made at any time, before or after  Retirement,  Disability,
death or  Termination  of  Employment,  and whether or not the  Participant  (or
Beneficiary) is in the process of being paid pursuant to an installment  payment
schedule.  If made  before  Retirement,  Disability  or death,  a  Participant's
Withdrawal Amount shall be his or her Account Balance calculated as if there had
occurred a Termination  of Employment as of the day of the election.  No partial
withdrawals of the Withdrawal  Amount shall be allowed.  The  Participant  shall
make this  election  by  giving  the  Committee  advance  written  notice of the
election  in a  form  determined  from  time  to  time  by  the  Committee.  The
Participant  shall be paid the  Withdrawal  Amount  within 60 days of his or her
election. Once the Withdrawal Amount is paid, the Participant's participation in
the Plan shall  terminate,  the  Participant's  Unvested Accrued Amounts will be
forfeited and the  Participant  shall not be eligible to participate in the Plan
in the future. The payment of this Withdrawal Amount shall not be subject to the
Deduction Limitation.

                                    ARTICLE 5
                               Retirement Benefit

     5.1 RETIREMENT BENEFIT.  Subject to the Deduction Limitation, a Participant
who Retires shall receive, as a Retirement Benefit, his or her Account Balance.

5.2      PAYMENT OF RETIREMENT BENEFIT. A Participant, in connection with his or
         her  commencement  of  participation  in the  Plan,  shall  elect on an
         Election  Form to  receive  the  Retirement  Benefit  in a lump  sum or
         pursuant to a Monthly  Installment Method of 60, 120 or 180 months. The
         Participant  may  annually  change his or her  election to an allowable
         alternative  payout  period by  submitting a new  Election  Form to the
         Committee, provided that any such Election Form is submitted at least 2
         years  prior to the  Participant's  Retirement  and is  accepted by the
         Committee  in its sole  discretion.  The  Election  Form most  recently
         accepted by the  Committee  shall  govern the payout of the  Retirement
         Benefit.  If a  Participant  does not make any election with respect to
         the payment of the Retirement Benefit, such benefit shall be payable in
         a lump

                                                        12

<PAGE>


SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan


         sum. The lump sum payment shall be made, or installment  payments shall
         commence, no later than 60 days after the date the Participant Retires.
         Notwithstanding the foregoing,  if the Company enters into a consulting
         arrangement with a Participant following the Participant's  Retirement,
         the  payment  of the  Retirement  Benefit  shall be  delayed  and shall
         commence  no  later  than  60  days  after  the  date  the   consulting
         arrangement  terminates.  Any  payment  made  shall be  subject  to the
         Deduction Limitation.

5.3      DEATH PRIOR TO COMPLETION OF RETIREMENT  BENEFIT. If a Participant dies
         after Retirement but before the Retirement Benefit is paid in full, the
         Participant's  unpaid  Retirement  Benefit  payments shall continue and
         shall be paid to the  Participant's  Beneficiary (a) over the remaining
         number of months  and in the same  amounts as that  benefit  would have
         been paid to the Participant had the Participant  survived, or (b) in a
         lump sum,  if  requested  by the  Beneficiary  and  allowed in the sole
         discretion of the Committee,  that is equal to the Participant's unpaid
         remaining Account Balance.

                                    ARTICLE 6
                         Pre-Retirement Survivor Benefit

6.1      PRE-RETIREMENT  SURVIVOR BENEFIT.  Subject to the Deduction Limitation,
         the Participant's  Beneficiary shall receive a Pre-Retirement  Survivor
         Benefit equal to the  Participant's  Account Balance if the Participant
         dies before he or she Retires,  experiences a Termination of Employment
         or suffers a Disability.

     6.2 PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT. The Pre-Retirement Survivor
Benefit  shall be paid in the same manner and at the same time as  specified  in
the election made by the Participant pursuant to Section 5.2.

                                    ARTICLE 7
                               Termination Benefit

7.1      TERMINATION  BENEFIT.   Subject  to  the  Deduction   Limitation,   the
         Participant shall receive a Termination  Benefit,  which shall be equal
         to the Participant's Account Balance (i.e.,  determined based on Vested
         Company   Matching   Contributions   and  Vested  Company   Restoration
         Contributions) if a Participant experiences a Termination of Employment
         prior to his or her Retirement, death or Disability.

7.2      PAYMENT OF TERMINATION  BENEFIT.  The Termination Benefit shall be paid
         in a lump  sum  within  60  days  of  the  Termination  of  Employment.
         Notwithstanding the foregoing,  a Participant may elect either (i) upon
         his  election to  participate  in the Plan or (ii) at any time at least
         two years prior to Termination of Employment to receive the Termination
         Benefit in three annual installments.
         Any payment made shall be subject to the Deduction Limitation.

                                                        13

<PAGE>


SIERRA HEALTH SERVICES, INC.
Deferred Compensation Plan


                                    ARTICLE 8
                          Disability Waiver and Benefit

8.1      DISABILITY WAIVER.

     (a) WAIVER OF DEFERRAL. A Participant who is determined by the Committee to
be  suffering  ------------------  from  a  Disability  shall  be  excused  from
fulfilling  that portion of the Annual  Deferral  Amount  commitment  that would
otherwise  have been  withheld  from a  Participant's  Base Annual Salary and/or
Annual  Bonus for the Plan Year during  which the  Participant  first  suffers a
Disability.  During  the  period of  Disability,  the  Participant  shall not be
allowed to make any  additional  deferral  elections,  but will  continue  to be
considered a Participant  for all other  purposes of this Plan.  Notwithstanding
the  foregoing,  if the Disability is determined by the Committee to be expected
to be of a short term duration,  the Annual Deferral Amount shall continue to be
withheld from a Participant's Base Annual Salary and/or Annual Bonus.

         (b)      RETURN TO WORK. If a Participant returns to employment with an
                  Employer, after a Disability ceases, the Participant may elect
                  to defer an Annual Deferral Amount for the Plan Year following
                  his or her return to  employment or service and for every Plan
                  Year thereafter while a Participant in the Plan; provided such
                  deferral  elections are otherwise allowed and an Election Form
                  is delivered to and  accepted by the  Committee  for each such
                  election in accordance with Section 3.3 above.

8.2      CONTINUED  ELIGIBILITY;  DISABILITY BENEFIT. A Participant  suffering a
         Disability shall, for benefit purposes under this Plan,  continue to be
         considered  to be  employed,  and shall be  eligible  for the  benefits
         provided for in Articles 4, 5, 6 or 7 in accordance with the provisions
         of those Articles.  Notwithstanding the above, the Committee shall have
         the right to, in its sole and absolute  discretion  and for purposes of
         this Plan only, and must in the case of a Participant  who is otherwise
         eligible  to  Retire,  deem  the  Participant  to  have  experienced  a
         Termination  of  Employment,  or in the  case of a  Participant  who is
         eligible to Retire,  to have Retired,  at any time (or in the case of a
         Participant who is eligible to Retire,  as soon as  practicable)  after
         such Participant is determined to be permanently disabled (i) under the
         Participant  Employer's  long-term  disability plan (or would have been
         determined to be  permanently  disabled had he or she  participated  in
         that plan),  or (ii) if such a plan does not exist, by the Committee in
         its sole  discretion,  in which case the  Participant  shall  receive a
         Disability  Benefit equal to his or her Account Balance at the time the
         Committee's determination.  The Disability Benefit shall be paid in the
         same manner and at the same time as specified  in the election  made by
         the  Participant  pursuant to Section 5.2,  unless the Committee in its
         sole discretion  elects at any time to pay such amount or any remaining
         amount in a lump sum payment.  Any payment made shall be subject to the
         Deduction Limitation.

                                    ARTICLE 9
                             Beneficiary Designation

     9.1  BENEFICIARY.  Each  Participant  shall have the right, at any time, to
designate his or her  Beneficiary(ies)  (both primary as well as  contingent) to
receive any benefits payable under the Plan to a beneficiary upon the death of a
Participant. The Beneficiary designated under this

                                                        14

<PAGE>


     SIERRA HEALTH SERVICES, INC. Deferred Compensation Plan


         Plan may be the same as or different from the  Beneficiary  designation
         under  any  other  plan  of  an  Employer  in  which  the   Participant
         participates.

9.2      BENEFICIARY  DESIGNATION;  CHANGE; SPOUSAL CONSENT. A Participant shall
         designate  his  or  her  Beneficiary  by  completing  and  signing  the
         Beneficiary  Designation Form, and returning it to the Committee or its
         designated  agent.  A  Participant  shall  have the  right to  change a
         Beneficiary  by  completing,  signing and otherwise  complying with the
         terms of the Beneficiary Designation Form and the Committee's rules and
         procedures,  as in effect from time to time. If the  Participant  names
         someone other than his or her spouse as a Beneficiary for more than 50%
         of  the  Participant's   benefits,  a  spousal  consent,  in  the  form
         designated  by the  Committee,  must be  signed  by that  Participant's
         spouse  and  returned  to the  Committee.  Upon the  acceptance  by the
         Committee  of a  new  Beneficiary  Designation  Form,  all  Beneficiary
         designations  previously filed shall be cancelled.  The Committee shall
         be entitled to rely on the last  Beneficiary  Designation Form filed by
         the  Participant  and  accepted  by the  Committee  prior to his or her
         death.

9.3      ACKNOWLEDGMENT.   No   designation   or  change  in  designation  of  a
         Beneficiary   shall  be   effective   until   received,   accepted  and
         acknowledged in writing by the Committee or its designated agent.

9.4      NO  BENEFICIARY  DESIGNATION.  If a  Participant  fails to  designate a
         Beneficiary  as provided in Sections  9.1, 9.2 and 9.3 above or, if all
         designated  Beneficiaries  predecease  the  Participant or die prior to
         complete   distribution  of  the  Participant's   benefits,   then  the
         Participant's  designated  Beneficiary shall be deemed to be his or her
         surviving  spouse.  If the  Participant  has no surviving  spouse,  the
         benefits  remaining under the Plan to be paid to a Beneficiary shall be
         payable to the executor or personal representative of the Participant's
         estate.

9.5      DOUBT  AS TO  BENEFICIARY.  If the  Committee  has any  doubt as to the
         proper  Beneficiary  to receive  payments  pursuant  to this Plan,  the
         Committee shall have the right, exercisable in its discretion, to cause
         the Participant's  Employer to withhold such payments until this matter
         is resolved to the Committee's satisfaction.

9.6      DISCHARGE OF  OBLIGATIONS.  The payment of benefits under the Plan to a
         Beneficiary  shall fully and  completely  discharge  the  Company,  all
         Employers and the  Committee  from all further  obligations  under this
         Plan with  respect  to the  Participant,  and that  Participant's  Plan
         Agreement shall terminate upon such full payment of benefits.

                                   ARTICLE 10
                                Leave of Absence

10.1     PAID  LEAVE  OF  ABSENCE.   If  a  Participant  is  authorized  by  the
         Participant's  Employer  for any reason to take a paid leave of absence
         from the employment of the Employer,  the Participant shall continue to
         be considered  employed by the Employer and the Annual  Deferral Amount
         shall  continue  to be  withheld  during  such paid leave of absence in
         accordance with Section 3.3.

10.2     UNPAID  LEAVE  OF  ABSENCE.  If a  Participant  is  authorized  by  the
         Participant's  Employer  for any  reason  to take an  unpaid  leave  of
         absence from the  employment of the  Employer,  the  Participant  shall
         continue to be considered  employed by the Employer and the Participant
         shall be excused  from making  deferrals  until the earlier of the date
         the leave of absence expires or

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         the  Participant  returns  to  a  paid  employment  status.  Upon  such
         expiration or return,  deferrals shall resume for the remaining portion
         of the Plan Year in which the expiration or return occurs, based on the
         deferral election,  if any, made for that Plan Year. If no election was
         made for that Plan Year, no deferral shall be withheld.

                                   ARTICLE 11
                     Termination, Amendment or Modification

11.1     TERMINATION.  Each Employer reserves the right to terminate the Plan at
         any time with respect to any or all of its  participating  Employees by
         the actions of its board of directors. Upon the termination of the Plan
         with  respect to any  Employer,  the Plan  Agreements  of the  affected
         Participants  who are employed by that  Employer  shall  terminate  and
         their  Account  Balance,  determined  as  if  they  had  experienced  a
         Termination of Employment on the date of Plan  termination  or, if Plan
         termination occurs after the date upon which a Participant was eligible
         to Retire,  then with respect to that  Participant  as if he or she had
         Retired  on  the  date  of  Plan  termination,  shall  be  paid  to the
         Participants as follows:  Prior to a Change in Control,  if the Plan is
         terminated with respect to all of its  Participants,  an Employer shall
         have  the  right,  in its  sole  discretion,  and  notwithstanding  any
         elections made by the  Participant,  to pay such benefits in a lump sum
         or pursuant  to a Monthly  Installment  Method of up to 15 years,  with
         amounts credited and debited during the installment  period as provided
         herein.  If the Plan is terminated with respect to less than all of its
         Participants,  an Employer  shall be required to pay such benefits in a
         lump sum. After a Change in Control,  the Employer shall be required to
         pay such benefits in a lump sum. The  termination of the Plan shall not
         adversely affect any Participant or Beneficiary who has become entitled
         to the  payment  of any  benefits  under  the  Plan  as of the  date of
         termination;  provided however,  that the Employer shall have the right
         to accelerate  installment  payments by paying the Account Balance in a
         lump sum or  pursuant  to a  Monthly  Installment  Method  using  fewer
         months.

11.2     AMENDMENT.  Any Employer may, at any time,  amend or modify the Plan in
         whole or in part with  respect to that  Employer  by the actions of its
         board  of   directors;   provided,   however,   that  no  amendment  or
         modification  shall be effective to decrease or restrict the value of a
         Participant's Account Balance in existence at the time the amendment or
         modification is made,  calculated as if the Participant had experienced
         a Termination  of Employment as of the effective  date of the amendment
         or modification,  or, if the amendment or modification occurs after the
         date upon which the Participant was eligible to Retire, the Participant
         had Retired as of the effective date of the amendment or  modification.
         The  amendment  or  modification  of the  Plan  shall  not  affect  any
         Participant  or Beneficiary  who has become  entitled to the payment of
         benefits   under  the  Plan  as  of  the  date  of  the   amendment  or
         modification; provided, however, that the Employer shall have the right
         to accelerate  installment  payments by paying the Account Balance in a
         lump sum or  pursuant  to a  Monthly  Installment  Method  using  fewer
         months.

11.3     PLAN AGREEMENT. Despite the provisions of Sections 11.1 and 11.2 above,
         if a Participant's Plan Agreement contains benefits or limitations that
         are not in this Plan document, the Employer may only amend or terminate
         such provisions with the consent of the Participant.

11.4     EFFECT OF PAYMENT.  The full payment of the  applicable  benefit  under
         Section  4.4 or  Articles  5, 6, 7 or 8 of the  Plan  shall  completely
         discharge all  obligations  to a Participant  and his or her designated
         Beneficiaries  under  this Plan and the  Participant's  Plan  Agreement
         shall terminate.

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                                   ARTICLE 12
                                 Administration

12.1     COMMITTEE DUTIES.  This Plan shall be administered by a Committee which
         shall  consist  of the  Board,  or such  committee  as the Board  shall
         appoint.  Members of the Committee may be Participants under this Plan.
         The Committee shall also have the discretion and authority to (i) make,
         amend, interpret, and enforce all appropriate rules and regulations for
         the  administration of this Plan and (ii) decide or resolve any and all
         questions  including  interpretations  of this  Plan,  as may  arise in
         connection with the Plan.

12.2     AGENTS.  In the  administration  of this Plan,  the Committee may, from
         time to time,  employ  agents and delegate to them such  administrative
         duties  as it sees  fit  (including  acting  through  a duly  appointed
         representative)  and may from time to time consult with counsel who may
         be counsel to any Employer.

12.3     BINDING  EFFECT OF  DECISIONS.  The decision or action of the Committee
         with respect to any question  arising out of or in connection  with the
         administration,  interpretation  and  application  of the  Plan and the
         rules  and  regulations   promulgated  hereunder  shall  be  final  and
         conclusive  and  binding  upon all persons  having any  interest in the
         Plan.

12.4     INDEMNITY OF COMMITTEE. All Employers shall indemnify and hold harmless
         the  members  of the  Committee  against  any and all  claims,  losses,
         damages,  expenses or liabilities arising from any action or failure to
         act with respect to this Plan, except in the case of willful misconduct
         by the Committee or any of its members.

12.5     EMPLOYER INFORMATION. To enable the Committee to perform its functions,
         each Employer shall supply full and timely information to the Committee
         on all matters  relating to the compensation of its  Participants,  the
         date  and  circumstances  of  the  Retirement,   Disability,  death  or
         Termination of Employment of its Participants, and such other pertinent
         information as the Committee may reasonably require.


                                   ARTICLE 13
                          Other Benefits and Agreements

13.1     COORDINATION   WITH  OTHER  BENEFITS.   The  benefits  provided  for  a
         Participant  and  Participant's  Beneficiary  under  the  Plan  are  in
         addition to any other benefits  available to such Participant under any
         other plan or program for employees of the Participant's  Employer. The
         Plan  shall  supplement  and shall not  supersede,  modify or amend any
         other  such  plan or  program  except  as may  otherwise  be  expressly
         provided.


                                   ARTICLE 14
                                Claims Procedures

14.1     PRESENTATION  OF CLAIM.  Any  Participant  or Beneficiary of a deceased
         Participant (such Participant or Beneficiary being referred to below as
         a  "Claimant")  may  deliver  to the  Committee  a written  claim for a
         determination with respect to the amounts distributable to such

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         Claimant  from the Plan.  If such a claim  relates to the contents of a
         notice received by the Claimant,  the claim must be made within 60 days
         after such notice was received by the  Claimant.  All other claims must
         be made  within 180 days of the date on which the event that caused the
         claim to arise occurred.  The claim must state with  particularity  the
         determination desired by the Claimant.

     14.2  NOTIFICATION  OF DECISION.  The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in writing:

     (a) that the Claimant's requested determination has been made, and that the
claim has been allowed in full; or

         (b)      that the Committee has reached a conclusion contrary, in whole
                  or in part, to the  Claimant's  requested  determination,  and
                  such  notice  must  set  forth in a  manner  calculated  to be
                  understood by the Claimant:

     (i) the specific reason(s) for the denial of the claim, or any part of it;

     (ii) specific  reference(s) to pertinent  provisions of the Plan upon which
such denial was based;

                  (iii)    a   description   of  any   additional   material  or
                           information necessary for the Claimant to perfect the
                           claim,  and an  explanation  of why such  material or
                           information is necessary;  and (iv) an explanation of
                           the claim review  procedure set forth in Section 14.3
                           below.

14.3     REVIEW OF A DENIED CLAIM.  Within 60 days after receiving a notice from
         the  Committee  that a claim has been  denied,  in whole or in part,  a
         Claimant (or the Claimant's  duly authorized  representative)  may file
         with the Committee a written  request for a review of the denial of the
         claim.  Thereafter,  but  not  later  than  30 days  after  the  review
         procedure  began,  the  Claimant  (or the  Claimant's  duly  authorized
         representative):

         (a)      may review pertinent documents;

         (b)      may submit written comments or other documents; and/or

     (c) may request a hearing, which the Committee, in its sole discretion, may
grant.

14.4     DECISION ON REVIEW.  The Committee  shall render its decision on review
         promptly,  and not later  than 60 days  after  the  filing of a written
         request  for  review of the  denial,  unless a hearing is held or other
         special  circumstances  require  additional  time,  in  which  case the
         Committee's  decision must be rendered within 120 days after such date.
         Such decision  must be written in a manner  calculated to be understood
         by the Claimant, and it must contain:

         (a)      specific reasons for the decision;

     (b) specific  reference(s)  to the pertinent Plan provisions upon which the
decision was based; and

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         (c)      such other matters as the Committee deems relevant.

14.5     LEGAL ACTION. A Claimant's  compliance with the foregoing provisions of
         this Article 14 is a mandatory  prerequisite  to a Claimant's  right to
         commence any legal action with respect to any claim for benefits  under
         this Plan.

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                                   ARTICLE 15
                                      Trust

15.1     ESTABLISHMENT  OF THE TRUST. The Company shall establish the Trust, and
         the each Employer  shall at least  annually  transfer over to the Trust
         such assets as the Employer  determines are necessary to provide,  on a
         present value basis, for its future liabilities created with respect to
         all Annual  Deferral  Amounts,  Company  Matching  Amounts  and Company
         Restoration  Amounts for such Employer's  Participants  for all periods
         prior  to the  transfer,  as  well as the  credits  and  debits  to the
         Participants'  Account Balance (and Unvested  Accrued  Amounts) for all
         periods prior to the transfer,  taking into  consideration the value of
         the assets in the trust at the time of the transfer.

15.2     INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of the Plan
         and the Plan  Agreement  shall  govern the rights of a  Participant  to
         receive distributions pursuant to the Plan. The provisions of the Trust
         shall  govern  the  rights  of  the  Employers,  Participants  and  the
         creditors of the Employers to the assets transferred to the Trust. Each
         Employer shall at all times remain liable to carry out its  obligations
         under the Plan.

15.3     DISTRIBUTIONS  FROM THE TRUST.  Each Employer's  obligations  under the
         Plan may be  satisfied  with Trust assets  distributed  pursuant to the
         terms  of the  Trust,  and  any  such  distribution  shall  reduce  the
         Employer's obligations under this Plan.


                                   ARTICLE 16
                                  Miscellaneous

16.1     UNSECURED  GENERAL  CREDITOR.  Participants  and  their  Beneficiaries,
         heirs,  successors and assigns shall have no legal or equitable rights,
         interests  or claims in any  property  or  assets of an  Employer.  For
         purposes of the payment of benefits  under this Plan, any and all of an
         Employer's  assets  shall  be,  and  remain,  the  general,   unpledged
         unrestricted assets of the Employer. An Employer's obligation under the
         Plan shall be merely that of an unfunded and  unsecured  promise to pay
         money in the future.

16.2     EMPLOYER'S  LIABILITY.  An  Employer's  liability  for the  payment  of
         benefits shall be defined only by the Plan and the Plan  Agreement,  as
         entered into between the Employer and a Participant.  An Employer shall
         have no obligation to a Participant  under the Plan except as expressly
         provided in the Plan and his or her Plan Agreement.

16.3     NONASSIGNABILITY. Neither a Participant nor any other person shall have
         any right to  commute,  sell,  assign,  transfer,  pledge,  anticipate,
         mortgage or  otherwise  encumber,  transfer,  hypothecate,  alienate or
         convey in advance  of actual  receipt,  the  amounts,  if any,  payable
         hereunder,  or any part thereof, which are, and all rights to which are
         expressly  declared to be,  unassignable and  non-transferable,  except
         that the foregoing  shall not apply to any family  support  obligations
         set forth in a court order. No part of the amounts payable shall, prior
         to actual payment,  be subject to seizure,  attachment,  garnishment or
         sequestration  for the  payment  of any  debts,  judgments,  alimony or
         separate  maintenance owed by a Participant or any other person, nor be
         transferable by operation of law in the event of a Participant's or any
         other person's bankruptcy or insolvency.

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     16.4 NOT A CONTRACT OF  EMPLOYMENT.  The terms and  conditions of this Plan
shall not be deemed to  ----------------------------  constitute  a contract  of
employment  between  the  Company  or any  Employer  and the  Participant.  Such
employment is hereby  acknowledged  to be an "at will"  employment  relationship
that can be terminated at any time for any reason, or no reason, with or without
cause,  and with or  without  notice,  unless  expressly  provided  in a written
employment agreement. Nothing in this Plan shall be deemed to give a Participant
the right to be retained  in the  service of the  Company or any  Employer or to
interfere  with the  right of the  Company  or any  Employer  to  discipline  or
discharge the Participant at any time.

16.5     FURNISHING  INFORMATION.  A Participant or his or her Beneficiary  will
         cooperate  with the  Committee by  furnishing  any and all  information
         requested  by the  Committee  and take  such  other  actions  as may be
         requested in order to facilitate the administration of the Plan and the
         payments of  benefits  hereunder,  including  but not limited to taking
         such physical examinations as the Committee may deem necessary.

16.6     TERMS. Whenever any words are used herein in the masculine,  they shall
         be  construed  as though  they were in the  feminine in all cases where
         they  would so apply;  and  whenever  any words are used  herein in the
         singular or in the plural,  they shall be construed as though they were
         used in the  plural or the  singular,  as the case may be, in all cases
         where they would so apply.

16.7     CAPTIONS. The captions of the articles, sections and paragraphs of this
         Plan are for  convenience  only and shall  not  control  or affect  the
         meaning or construction of any of its provisions.

     16.8 GOVERNING LAW.  Subject to ERISA, the provisions of this Plan shall be
construed and interpreted  according to the internal laws of the State of Nevada
without regard to its conflicts of laws principles.

16.9     NOTICE.  Any notice or filing  required or permitted to be given to the
         Committee  under  this  Plan  shall be  sufficient  if in  writing  and
         hand-delivered, or sent by registered or certified mail, to the address
         below:

                  Sierra Health Services Deferred
                    Compensation Plan Committee
                  P.O. Box 15645
                  Las Vegas, Nevada 89114-5645

         Such notice  shall be deemed  given as of the date of  delivery  or, if
         delivery is made by mail,  as of the date shown on the  postmark on the
         receipt for registration or certification.

         Any notice or filing required or permitted to be given to a Participant
         under this Plan shall be sufficient  if in writing and  hand-delivered,
         or sent by mail, to the last known address of the Participant.

16.10    SUCCESSORS.  The  provisions  of this Plan  shall bind and inure to the
         benefit of the  Participant's  Employer and its  successors and assigns
         and the Participant and the Participant's designated Beneficiaries.

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16.11    SPOUSE'S  INTEREST.  The interest in the benefits hereunder of a spouse
         of  a  Participant   who  has   predeceased   the   Participant   shall
         automatically  pass to the Participant and shall not be transferable by
         such spouse in any manner,  including  but not limited to such spouse's
         will,  nor  shall  such  interest  pass  under  the  laws of  intestate
         succession.

16.12    VALIDITY.  In case any  provision  of this  Plan  shall be  illegal  or
         invalid for any reason,  said  illegality or invalidly shall not affect
         the  remaining  parts  hereof,  but this Plan  shall be  construed  and
         enforced  as if such  illegal  or  invalid  provision  had  never  been
         inserted herein.

16.13    INCOMPETENT.  If the  Committee  determines  in its  discretion  that a
         benefit  under  this Plan is to be paid to a minor,  a person  declared
         incompetent  or to a person  incapable of handling the  disposition  of
         that  person's  property,  the  Committee  may  direct  payment of such
         benefit to the guardian, legal representative or person having the care
         and  custody  of such  minor,  incompetent  or  incapable  person.  The
         Committee  may require proof of minority,  incompetency,  incapacity or
         guardianship,  as it may deem appropriate  prior to distribution of the
         benefit. Any payment of a benefit shall be a payment for the account of
         the Participant and the Participant's Beneficiary,  as the case may be,
         and shall be a complete  discharge of any liability  under the Plan for
         such payment amount.

16.14    COURT ORDER. The Committee is authorized to make any payments  directed
         by court  order in any  action in which the Plan or the  Committee  has
         been named as a party. In addition, if a court determines that a spouse
         or former  spouse of a  Participant  has an interest in the Plan as the
         result of a property  settlement or otherwise,  the  Committee,  in its
         sole  discretion,  shall have the right,  notwithstanding  any election
         made by a Participant, to immediately distribute the spouse's or former
         spouse's interest in the Plan to that spouse or former spouse.

16.15    DISTRIBUTION IN THE EVENT OF TAXATION.

     (a) IN GENERAL.  If, for any reason,  all or any portion of a Participant's
benefit under this ----------  Plan becomes taxable to the Participant  prior to
receipt, a Participant may petition the Committee before a Change in Control, or
the trustee of the Trust after a Change in Control,  for a distribution  of that
portion of his or her benefit that has become taxable.  Upon the grant of such a
petition, which grant shall not be unreasonably withheld (and, after a Change in
Control,  shall be granted),  a Participant's  Employer shall  distribute to the
Participant  immediately  available  funds in an  amount  equal  to the  taxable
portion of his or her benefit  (which  amount  shall not exceed a  Participant's
Account Balance under the Plan).  If the petition is granted,  the tax liability
distribution  shall be made  within 90 days of the date  when the  Participant's
petition is granted. Such a distribution shall affect and reduce the benefits to
be paid under this Plan.

         (b)      TRUST.  If the Trust  terminates  in  accordance  with Section
                  3.7(e) of the  Trust and  benefits  are  distributed  from the
                  Trust to a Participant  in accordance  with that Section,  the
                  Participant's benefits under this Plan shall be reduced to the
                  extent of such distributions.

     16.16 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL. The Company and
each  Employer is aware that upon the  occurrence  of a Change in  Control,  the
Board or the board of directors of the Employer (which might then be composed of
new members) or a shareholder of the

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Deferred Compensation Plan


         Company or the  Employer,  or of any successor  corporation  might then
         cause or attempt to cause the Company,  the Employer or such  successor
         to refuse to comply with its obligations under the Plan and might cause
         or attempt to cause the Company or the  Employer to  institute,  or may
         institute,   litigation  seeking  to  deny  Participants  the  benefits
         intended  under the Plan.  In these  circumstances,  the purpose of the
         Plan  could be  frustrated.  Accordingly,  if,  following  a Change  in
         Control,  it should  appear to any  Participant  that the Company,  its
         Employer or any successor  corporation has failed to comply with any of
         its obligations  under the Plan or any agreement  thereunder or, if the
         Company,  such Employer or any other person takes any action to declare
         the Plan void or  unenforceable  or institutes  any litigation or other
         legal  action  designed  to  deny,  diminish  or to  recover  from  any
         Participant the benefits intended to be provided,  then the Company and
         the Employer  irrevocably  authorize such Participant to retain counsel
         of his or her choice at the  expense of the  Company  and the  Employer
         (who  shall  be  jointly  and  severally   liable)  to  represent  such
         Participant  in  connection  with  the  initiation  or  defense  of any
         litigation  or other legal  action,  whether by or against the Company,
         the  Employer or any  director,  officer,  shareholder  or other person
         affiliated with the Company,  the Employer or any successor  thereto in
         any jurisdiction.

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SIERRA HEALTH SERVICES, INC.
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     IN WITNESS WHEREOF, the Company has signed this Plan document as of July 1,
1997.

                                    SIERRA HEALTH SERVICES, INC.,
                                       a  Nevada corporation


                                    By:     /S/  ERIN E. MACDONALD

                                    Title:PRESIDENT AND CHIEF OPERATING OFFICER



                                                        24

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