MID ATLANTIC MEDICAL SERVICES, INC.
              NON-QUALIFIED STOCK OPTION AGREEMENT FOR EMPLOYEES


         AGREEMENT  ("Agreement")  dated the date indicated on the attached Face
Sheet,  by  and  between  Mid  Atlantic  Medical  Services,   Inc.,  a  Delaware
corporation  ("Corporation"),  and the person  indicated  on the  attached  Face
Sheet,  an  employee  of  the  Corporation   and/or  one  of  its   subsidiaries
("Optionee").

         WHEREAS,  the  Corporation  desires to have  Optionee  continue  in its
employ and to provide  Optionee  with an  incentive by sharing in the success of
the Corporation;

          WHEREAS, in order to provide such an incentive to its officers and key
employees,  the Corporation has adopted the Mid Atlantic Medical  Services,
Inc. 1999 Non-Qualified Stock Option Plan ("Plan");

         WHEREAS,  the  Corporation  desires to grant to Optionee under the Plan
options not intended to qualify as "incentive  stock options" within the meaning
of Section 422 or any successor  provision of the Internal Revenue Code of 1986,
as amended ("Code"); and

         WHEREAS,  unless otherwise  provided herein,  capitalized terms used in
this Agreement shall have the meaning given them in the Plan.

         NOW,   THEREFORE,   in   consideration  of  the  mutual  covenants  and
representations  herein contained and intending to be legally bound, the parties
hereto agree as follows:

         1. Number of Shares and Price.  The  Corporation  hereby  grants to the
Optionee an option  ("Option")  to purchase the number of shares of Common Stock
set forth on the attached Face Sheet of this  Agreement.  The exercise price per
share of Common  Stock of the  Option  shall be as is set forth on the  attached
Face Sheet of this  Agreement,  such price being the Fair Market Value per share
of Common  Stock on the Date of Grant of the Option.  The Option is not intended
to qualify as an "incentive stock option" under Section 422 of the Code.

         2. Term and  Exercise.  The Option shall expire five (5) years from the
date hereof,  subject to earlier  termination as set forth in Section 3. Subject
to the  provisions  of  Section  3,  the  Option  shall  become  exercisable  in
installments as set forth on the attached Face Sheet of this Agreement.

         3.       Exercise of Option Upon Termination of Employment.

             a)     Termination of Vested Option Upon Termination of Employment.

                           (i) Termination.  Upon the Optionee's  Termination of
                  Employment,  other than by reason of death or Disability,  the
                  Optionee  may,  within  three  months  from  the  date of such
                  Termination  of  Employment,  exercise  all or any part of the
                  Option  to the  extent  it was  exercisable  at  the  date  of
                  Termination  of  Employment.  In no event  may the  Option  be
                  exercised  later than the expiration date described in Section
                  2.

                           (ii) Disability. Upon the Optionee's Disability Date,
                  the Optionee may, within one year after such Disability  Date,
                  exercise  all or a part of the  Option,  whether or not it was
                  exercisable  on such  Disability  Date, but only to the extent
                  not previously exercised. In no event, however, may the Option
                  be  exercised  later than the  expiration  date  described  in
                  Section 2.

                           (iii)  Death.  In  the  event  of  the  death  of the
                  Optionee  while  employed by the  Corporation or a Subsidiary,
                  the right of the Optionee's Beneficiary to exercise the Option
                  in full  (whether  or not all or any  part of the  Option  was
                  exercisable  as of the date of death,  but only to the  extent
                  not previously  exercised) shall expire upon the expiration of
                  one year from the date of the Optionee's death or, if earlier,
                  on the date of expiration of the Option determined pursuant to
                  Section 2.

          (b)  Termination  of Unvested  Option Upon  Termination of Employment.
     Except as provided in Sections 3(a)(ii) and 3(a)(iii), to the extent all or
     any part of the Option was not exercisable as of the date of Termination of
     Employment,  the  unexercisable  portion of the Option  shall expire at the
     date of such Termination of Employment.

          (c) Change of Control.  Notwithstanding  anything  to the  contrary in
     Section 2 or this  Section 3, in the event one of the events  specified  in
     Section 8.05(d)(i),  (ii), (iii) or (iv) of the Plan occurs, the provisions
     of  such  Section   8.05(d)  shall   determine   when  the  Option  becomes
     exercisable, when it may be exercised and when it expires.

     4. Exercise  Procedures.  The Option shall be exercisable by written notice
to the  Corporation,  which must be received by the Secretary of the Corporation
not later than 5:00 P.M.  local time at the  principal  executive  office of the
Corporation on the expiration date of the Option.  Such written notice shall set
forth (a) the number of shares of Common  Stock being  purchased,  (b) the total
exercise  price for the shares of Common  Stock being  purchased,  (c) the exact
name as it should appear on the stock certificate(s) to be issued for the shares
of  Common  Stock  being  purchased,  and (d) the  address  to which  the  stock
certificate(s)  should be sent.  The  exercise  price of shares of Common  Stock
purchased  upon exercise of the Option shall be paid in full (a) in cash, (b) by
delivery to the  Corporation  of shares of Common Stock (which  shares of Common
Stock must have been held for at least six months),  (c) in any  combination  of
cash and shares of Common Stock, or (d) by delivery of such other  consideration
as the  Committee  deems  appropriate  and in  compliance  with  applicable  law
(including  payment in accordance with a cashless  exercise  program approved by
the  Committee).  In the  event  that  any  shares  of  Common  Stock  shall  be
transferred to the Corporation to satisfy all or any part of the exercise price,
the part of the exercise price deemed to have been satisfied by such transfer of
shares of Common Stock shall be equal to the product  derived by multiplying the
Fair  Market  Value as of the date of  exercise  times  the  number of shares of
Common Stock transferred to the Corporation. Any shares of Common Stock tendered
in payment shall be duly endorsed in blank or  accompanied  by stock powers duly
endorsed  in  blank.  The  Optionee  may  not  transfer  to the  Corporation  in
satisfaction of the exercise price any fraction of a share of Common Stock,  and
any portion of the exercise price that would represent less than a full share of
Common Stock must be paid in cash by the Optionee.  Subject to Section 8 hereof,
certificates  for the  purchased  shares of  Common  Stock  will be  issued  and
delivered  to the  Optionee  as soon as  practicable  after the  receipt of such
payment of the exercise  price;  provided,  however,  that  delivery of any such
shares of Common Stock shall be deemed  effected  for all purposes  when a stock
transfer agent of the Corporation  shall have deposited such certificates in the
United States mail, addressed to Optionee,  at the address set forth on the Face
Sheet of this  Agreement  or to such other  address as Optionee may from time to
time designate in a written notice to the Corporation. The Optionee shall not be
deemed for any purpose to be a shareholder of the  Corporation in respect of any
shares of Common Stock as to which the Option shall not have been exercised,  as
herein provided,  until such shares of Common Stock have been issued to Optionee
by the Corporation hereunder.

         5. Plan Provisions Control Option Terms;  Modifications.  The Option is
granted  pursuant  and  subject  to the terms and  conditions  of the Plan,  the
provisions  of which  are  incorporated  herein by  reference.  In the event any
provision of this Agreement  shall conflict with any of the terms in the Plan as
constituted  on the Date of Grant,  the terms of the Plan as  constituted on the
Date of Grant shall control. Except as provided in Section 8.05 of the Plan, the
Option shall not be modified  after the Date of Grant except by express  written
agreement between the Corporation and the Optionee;  provided, however, that any
such  modification (a) shall not be inconsistent with the terms of the Plan, and
(b) shall be approved by the Committee.

         6.  Limitations  on  Transfer.  The  Option  may  not  be  assigned  or
transferred  other than by will,  by the laws of  descent  and  distribution  or
pursuant to a qualified domestic relations order as defined by the Code, Title I
of ERISA or the rules thereunder.

         7. Taxes.  The  Corporation  shall be  entitled to withhold  (or secure
payment from the Optionee in lieu of withholding)  the amount of any withholding
or other tax  required  by law to be withheld  or paid by the  Corporation  with
respect to any shares of Common Stock  issuable  under this  Agreement,  and the
Corporation  may defer  issuance of shares of Common  Stock upon the exercise of
the Option unless the Corporation is indemnified to its satisfaction against any
liability for any such tax. The amount of such  withholding or tax payment shall
be  determined  by the  Committee  or its  delegate  and shall be payable by the
Optionee at such time as the Committee determines.  The Optionee may satisfy his
or her  tax  withholding  obligation  by  (a)  having  cash  withheld  from  the
Optionee's  salary  or  other  compensation  payable  by  the  Corporation  or a
Subsidiary,  (b) the  payment  of cash to the  Corporation,  (c) the  payment in
shares of Common  Stock  already  owned by the  Optionee  valued at Fair  Market
Value, and/or (d) the withholding from the Option, at the appropriate time, of a
number of shares of Common Stock sufficient, based upon the Fair Market Value of
such shares of Common Stock, to satisfy such tax withholding  requirements.  The
Committee shall be authorized, in its sole and absolute discretion, to establish
such rules and procedures  relating to any such withholding  methods as it deems
necessary or appropriate,  including,  without limitation,  rules and procedures
relating to elections to have shares of Common Stock  withheld  upon exercise of
the Option to meet such withholding obligations.

         8.  No  Exercise  in  Violation  of  Law.  Notwithstanding  any  of the
provisions of this Agreement, the Optionee hereby agrees that he or she will not
exercise  the  Option  granted  hereby,  and  that the  Corporation  will not be
obligated to issue any shares of Common Stock to the Optionee hereunder,  if the
exercise thereof or the issuance of such shares of Common Stock shall constitute
a violation by the Optionee or the  Corporation  of any  provision of any law or
regulation of any governmental  authority.  Any determination in this connection
by the Committee shall be final, binding and conclusive.

         9. Securities Law Compliance. The Optionee agrees, for the Optionee and
his or her  Beneficiaries,  with respect to all shares of Common Stock  acquired
pursuant  to the terms and  conditions  of the Plan and the Option (or any other
shares of Common  Stock  issued  pursuant  to a stock  dividend  or stock  split
thereon or any securities  issued in lieu thereof or in substitution or exchange
therefor),  that  the  Optionee  and his or her  Beneficiaries  will not sell or
otherwise  dispose of these shares except pursuant to an effective  registration
statement under the Securities Act of 1933, as amended (the "Act"), or except in
a  transaction  that, in the opinion of counsel for the  Corporation,  is exempt
from registration under the Act. Further,  the Corporation shall not be required
to sell or  issue  any  shares  under  the  Option  if,  in the  opinion  of the
Corporation, (a) the issuance of such shares would constitute a violation by the
Optionee  or  the  Corporation  of  any  applicable  law  or  regulation  of any
government  authority or (b) the consent or approval of any governmental body is
necessary or desirable as condition of, or in connection  with,  the issuance of
such shares.

         10.  Adjustments.  The  existence of the Option shall not affect in any
way the right or power of the  Corporation or its directors or  shareholders  to
make or authorize any or all adjustments, recapitalizations, reorganizations, or
other changes in the  Corporation's  capital  structure or its business,  or any
merger  or  consolidation  of  the  Corporation,   or  any  issuance  of  bonds,
debentures,  preferred stock or prior preference stock ahead of or affecting the
Common  Stock or the  rights  thereof,  or  dissolution  or  liquidation  of the
Corporation,  or any  sale  or  transfer  of all or any  part of its  assets  or
business,  or any  other  corporate  act or  proceeding,  whether  of a  similar
character or otherwise.

         11.  Dispute  Resolution.  As a condition of granting  the Option,  the
Optionee agrees, for the Optionee and his or her Beneficiaries, that any dispute
or  disagreement  that may arise under or as a result of or pursuant to the Plan
and the Option  shall be  determined  by the  Committee in its sole and absolute
discretion, and any interpretation by the Committee of the terms of the Plan and
Option shall be final, binding and conclusive.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.

ATTEST:                             MID ATLANTIC MEDICAL SERVICES, INC.



__________________________          By:                                   
                                    Thomas P. Barbera, Interim
                                    President and Chief Executive Officer


                                     By:  
                                     Member of the Stock Option Committee

WITNESS:                            OPTIONEE


__________________________
                                                     (Signature)


<PAGE>




                                                                 



                                   FACE SHEET


Notice Addresses:

         Optionee:

                  ------------------------
                  4 Taft Court
                  Rockville, Maryland  20850

         Corporation:

                  Mid Atlantic Medical Services, Inc.
                  4 Taft Court
                  Rockville, Maryland  20850
                  Attention: Secretary

Grant Date:                                                   ___________


Total Options Granted:                                        ___________


Exercise Price Per Share of Common Stock:                     $__________


Vesting Schedule:

                                                     Number of Shares
                  Date                               (Non-Cumulative)


                  06/01/2000                                  ___
                  06/01/2001                                  ___
                  06/01/2002                                  ___


Expiration Date:

     Optioned  shares must be  purchased  within five (5) years from the date of
grant, which is _________. That is, all options must be exercised by __________.