1997 MANAGEMENT BONUS PROGRAM


     Participants in the 1997 Management Bonus Program shall include all non-
     sales positions from Level 10 up to Level 20 and the CEO.  Certain
     individuals who have Individual Performance Bonus Plans may be allocated
     only a portion of the management bonus (generally 50%).  Bonuses will be
     solely predicated on the consolidated earnings performance of Mid
     Atlantic Medical Services, Inc. (MAMSI) 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 the Company
            (MAMSI) achieves a profit of $34.4 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
            (MAMSI) achieves a profit of $46 million before income taxes,
           expansion or acquisition costs, and prior to the physicians'
          return of withhold and payment of physcians' bonuses.

     3.     PRO-RATION - In the event that the Company earns between
            $34,400,000 and $46,000,000, bonuses 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.  Pro-rated calculations  will be made at each salary
        level for the portion of the year that the new salary or level
       is in effect.  However, with respect to executive officers hired
      prior to March 1, 1997, bonus payments will disregard salary and
     grade level changes made after March 1, 1997.

     5.     NEW EMPLOYEES - New full-time employees are eligible to
           participate in the plan during their first year of employment.
          The bonus payment will be pro-rated accordingly for the portion
         of the year that the employee was employed.

     6.     TERMINATION - No bonus shall be paid to bonus participants who
            terminate or are terminated by the Company prior to the year
           end.  In the event of retirement, disability 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
           immediately following the receipt of the audited financial
          statement(s) for MAMSI for the year 1997.

     8.     BONUS PERCENTAGES - The distribution of the bonus payments to
            the Management personnel shall be limited according to the
            following percentage ranges.  The allocations will be reviewed
           annually and adjusted if necessary.

                  CEO                                       25-50%
                  Executive Staff (Level 18 & above)        12-35%


                  Senior Staff (Level 17)                   11-30%
                  Level 16                                  10-28%
                  Level 15                                   9-21%
                  Level 14                                   8-16%
                  Levels 12 and 13                           7-12%
                  Levels 10 and 11                           5- 7%


     9.     AMENDMENT-  The Board of Directors may amend the 1997 Management
           Bonus Plan to materially increase the amounts payable
          thereunder to participants, other than executive officers, or
         for any other reason.


                                                          February 26, 1997