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   <PAGE>  1

                      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. 1996 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,<PAGE>


     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,  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.<PAGE>


     <PAGE>  2

               (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  under  which,   if  so
     instructed  by the  Optionee,  shares  of  Common  Stock  may  be  issued
     directly  to the Optionee's broker or dealer upon receipt of the exercise
     price  in cash from the broker or dealer).   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<PAGE>


     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.   No modifications  may be
     made to the Option while the Optionee is subject to Section 16(b) of  the
     Exchange Act except in compliance with Rule 16b-3.

          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.<PAGE>


     <PAGE>  3

          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 the  payment of cash to the Corporation
     and/or by 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
     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<PAGE>


     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 discretion,  and any interpretation by  the Committee of  the
     terms of the Plan and Option shall be final, binding and conclusive.<PAGE>


     <PAGE>  4

          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: -------------------------------
                                        George T. Jochum, Chairman,
                                        President and Chief 
                                        Executive Officer


                                    By: -------------------------------
                                        Member of the Compensation
                                        Committee


     WITNESS:                           OPTIONEE



     --------------------------         -------------------------------
                                        (Signature)<PAGE>


     <PAGE>  5

                                     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)
            ----                       ----------------
         06/01/1997                        -------
         06/01/1998                        -------
         06/01/1999                        -------


     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 ----------.<PAGE>