1999 SENIOR MANAGEMENT BONUS PLAN
                 (to be approved by the Compensation Committee)


Participants  in the 1999 Senior  Management  Bonus Plan  ("Bonus  Plan")  shall
include all  full-time  positions  Level 17 and above  (except for certain sales
personnel who receive override  commissions),  which includes those  individuals
who could possibly be affected by Section  162(m) of the Internal  Revenue Code,
including but not limited to the Chairman or CEO. This  definition  includes all
full-time  employees  who are  Level 17 and  above  as of March 1,  1999 and all
full-time  employees  who are  promoted to or hired at a Level 17 or above after
March 1, 1999.  Bonuses will be solely  predicated on the consolidated  earnings
performance of Mid Atlantic Medical Services, Inc. (MAMSI).

Bonuses shall be paid according to the following guidelines:

1. Minimum  Bonus- Minimum  bonuses shall be paid if MAMSI and its  consolidated
subsidiaries  (the  "Company")  achieve a profit of  $36,000,000  before  income
taxes,  expansion or acquisition  costs, one time charges or credits not related
to current year operations,  and prior to the physicians' return of withhold and
payment of physicians' bonuses.

2. Maximum Bonus- Maximum bonuses shall be paid if the Company achieves a profit
of $42,000,000  before income taxes,  expansion or acquisition  costs,  one time
charges or credits  not  related to current  year  operations,  and prior to the
physicians' return of withhold and payment of physicians' bonuses.

3.  Pro-ration-  In the event that the Company  earns  between  $36,000,000  and
42,000,000 bonus payments will be pro-rated accordingly.

4. Bonus Base- In general, bonus payments will be calculated based on the salary
level on March 1,  1999.  With  respect  to new  participants  who are  hired or
initially  promoted to a full-time  non-sales  position Level 17 or higher after
March 1, 1999,  the bonus will be  calculated  at the initial Level 17 or higher
salary.With respect to a participant who is demoted during 1999, the amount will
be  calculated  on a pro-rata  basis  based on the  portion of the year that the
employee was employed in a full-time non-sales position Level 17 or higher.

5. New  Employees-  New  full-time  employees  or those  who are  promoted  to a
full-time  non-sales  position  Level 17 or higher  during 1999 are  eligible to
participate in the Bonus Plan.  The bonus payment will be pro-rated  accordingly
for the  portion  of the year that the  employee  was  employed  in a  full-time
non-sales  position  Level 17 or  higher  or upon any  other  reasonable  method
designed to fairly  compensate and recruit a new employee,  with the approval of
the Compensation Committee.

6.  Termination-  No bonus  shall be paid to bonus  participants  who  terminate
employment  with the Company or are  terminated by the Company prior to the year
end unless approved by the Compensation Committee. In the event of retirement or
death, the employee or his\her  beneficiary will receive a pro-rated  portion of
the bonus.

7. Time of Payment- Bonus payments shall be distributed following the completion
of the audit of the financial statement(s) for the Company for the year 1999.

8. Bonus  Percentages-  The  distribution  of the bonus payments to participants
shall be limited according to the following percentage ranges:

    
         Chairman,  CEO,  President                 12.5 - 45% 
         Senior Executive Vice President            10.5 -38%      
         Executive  Staff (Levels 18 through 23,
         excluding CEO, Chairman and Senior             
         Executive Vice President)                  6.0 - 28%
         Senior Staff (Level 17)                    5.5 - 25%

For the  purposes  of  administering  this Bonus  Plan,  any  offices  held by a
participant in an interim capacity will be credited as permanent positions.

9. Relationship to Other Bonus Plan- This Bonus Plan is substantially similar to
the 1999  Management  Bonus Plan for full-time  non-sales  employees Level 10 to
Level 16. The primary differences between the Bonus Plan and the 1999 Management
Bonus Plan are the percentage  payments available to personnel and the personnel
covered.

10.  Interpretation  of the  Bonus  Plan  by the  Compensation  Committee-  If a
question as to the  interpretation  of the Bonus Plan arises,  the  Compensation
Committee  may  interpret  the Bonus  Plan.  The  decision  of the  Compensation
Committee is final.

11.  Amendment-  The  Compensation  Committee  may not amend  the Bonus  Plan to
materially increase the amounts payable thereunder to participants.