1998 MANAGEMENT BONUS PLAN

Participants  in the 1998  Management  Bonus Plan shall  include  all  full-time
non-sales  positions  from  Level  10 up to Level  16.  Bonuses  will be  solely
predicated on the  consolidated  earnings  performance  of Mid Atlantic  Medical
Services,  Inc.  (MAMSI)  and will be accrued on at least a  quarterly  basis as
documented by the year end audited financial statements.

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 $33.750
         million before income taxes,  expansion or acquisition costs, 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 $52.50 million before income taxes,  expansion or acquisition
         costs,  and prior to the physicians'  return of withhold and payment of
         physicians' bonuses.

3.       Pro-ration- In the event that the Company earns between $33.750 million
         and $52.50 million, bonus payments will be pro-rated accordingly.

4.       Bonus Base- In general,  bonus  payments will be calculated on cash
         payments  made during the year for base salary,  which would take into
         account salary  increases due to promotion or merit  increases  (other
         than those to Level 17 or higher). Pro-rated calculations will be made
         at each salary level for the portion of the year that the new level is
         in effect.  If a participant  is demoted to under a Level 10 position,
         and remains in an under Level 10 position until December 31, 1998, the
         employee  will  received a pro-rata  bonus payment based upon the time
         the  participant  was in a  full-time  non-sales  Level  10 or  higher
         position  during  1998.   Similarly,   the  employee  is  promoted  or
         re-promoted  to a Level 10 or higher,  the  employee  is  eligible  to
         participate  in the Bonus  Plan on a  pro-rata  basis for all the time
         periods  during  which the  participant  was in a full-time  non-sales
         Level 10 or higher position during 1998.

5.       New  Employees-  New  full-time  non-sales  employees  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
         at a full-time non-sales Level 10 or higher position.

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




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7.       Time of  Payment-  Bonus  payments  shall  be  distributed  immediately
         following  the receipt of the audited  financial  statement(s)  for the
         Company for the year 1998.

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

         Level 16                                                      5.0 - 28%
         Level 15                                                      4.5 - 21%
         Level 14                                                      4.0 - 16%
         Level 12 & 13                                                 3.5 - 12%
         Level 10 & 11                                                 2.5 -  7%

9.       Relationship  to Other  Bonus  Plan- This  Bonus Plan is  substantially
         similar  to  the  1998  Senior  Management  Bonus  Plan  for  full-time
         non-sales  employees  Level  17 to Level  20,  including  the CEO.  The
         primary  differences  between  the  Bonus  Plan  and  the  1998  Senior
         Management  Bonus  Plan  are  the  percentage   payments  available  to
         personnel and the personnel covered.

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

11.      Amendment-  The  Board  of  Directors  may  amend  the  Bonus  Plan  to
         materially/increase  the amounts payable  thereunder to participants or
         for any other reason.