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.
2000 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 90 days from the
                         date of such Termination of Employment, exercise all or
                         any part of the Option as were  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
                         Optionee's  Beneficiary  shall be  entitled to exercise
                         all or any part of the  Option  that was  vested at the
                         date  of  the   Optionee's   death  until  the  initial
                         expiration date of such Option  determined  pursuant to
                         Section 2.  Notwithstanding  the above, if the Optionee
                         at the  time  of  death  had  been an  employee  of the
                         Corporation  or a Subsidiary for a period of ten years,
                         50% of  the  Optionee's  unvested  Option  will  become
                         vested and subject to exercise as stated  above and, if
                         the  Optionee at the time of death had been an employee
                         of the  Corporation  or a  Subsidiary  for a period  of
                         fifteen years,  all of the Optionee's  unvested  Option
                         will  become  vested and  subject to exercise as stated
                         above and shall expire 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, if one of the  events  specified  in
Section  7.05(d)(i),  (ii), (iii) or (iv) of the Plan occurs,  the provisions of
such Section 7.05(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).  If 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 Sections 8 and 9
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.  If any provision of
this Agreement conflicts 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 Sections  7.03 and 7.05 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
domestic relations order.

         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 specified.

ATTEST:                             MID ATLANTIC MEDICAL SERVICES, INC.



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

                                        By:
                                           Member of the Stock Option Committee

WITNESS:                            OPTIONEE


--------------------------
                                   (Signature)


<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)

                  06/01/2001                                  ___
                  06/01/2002                                  ___
                  06/01/2003                                  ___


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
__________.