MID ATLANTIC MEDICAL SERVICES, INC.

                      Plan for Deferral of Directors' Fees

1. Purpose.

This Plan for the Deferral of Directors'  Fees,  adopted by Mid Atlantic Medical
Services,  Inc.,  Rockville,  Maryland  (the  "Company")  is for the  purpose of
permitting  members of its Board of  Directors  to defer the receipt of fees for
services as a Director,  and as a member of any and all  committees of the Board
of Directors.

2. Eligibility.

Any Director who is serving on the Board at the  effective  date of this Plan or
who is hereafter elected or appointed to membership on the Board of Directors of
the  Company,  may elect to defer  receipt of either all or  one-half of his/her
future  Directors'  fees,  and to receive  such  deferred  fees,  together  with
earnings thereon, at the time and in the manner hereafter  provided,  subject to
all the terms and conditions of this Plan.

3. Election to Defer.

Election to defer  Directors'  fees shall be made by written  election on a form
provided by the Company,  which shall be filed with the Secretary of the Company
on or before  December 31 of any year.  Such  election  shall be effective  with
respect to Directors'  fees earned for services  performed  during the following
calendar  year,  except for the year 2000  wherein if an election  form is filed
with the Secretary of the Company  within sixty (60) days of the effective  date
of the plan,  such  election  shall be effective  with respect to fees earned by
him/her for services  performed in the year 2000 but  subsequent  to the date of
filing of his/her election.  However,  if a newly-elected or appointed  Director
files an election  within  sixty (60) days after  becoming a  Director,  his/her
election  may be made  effective  with  respect to fees  earned by  him/her  for
services  performed  in the same  calendar  year but  subsequent  to the date of
filing of his/her election.

4. Amount of Deferral.

At the time he makes his/her election, the Director shall:

    a. Indicate whether the deferral shall apply to all or to one-half of
his/her Directors' fees;

    b. Specify the payment date selected in accordance with paragraph 7 hereof;
 and

    c. Specify the method of payment  selected in  accordance  with  paragraph 8
    hereof.  Such election and all the terms thereof shall be  irrevocable  with
    respect to Directors' fees earned while that election is in effect.




5. Duration and Termination.

Any Election to Defer Directors' Fees shall continue in effect indefinitely from
year to year so long as the Director  continues as a Director of the Company.  A
Director may terminate his/her election at any time by written notice filed with
the Secretary of the Company, which shall only be effective with respect to fees
earned for  services  performed  subsequent  to such  notice of  termination.  A
Director  may elect to change  the  portion  of fees to be  deferred,  or change
his/her  selection  of the payment date or method of payment by filing a Revised
Election with the Secretary of the Company on or before December 31 of any year.
Such Revised  Election  shall apply with respect to  Directors'  Fees earned for
services performed during the following calendar year and thereafter.  No change
of date of payment or method of payment  shall  apply to fees  deferred  under a
prior election.

6. Earnings.

Each amount of deferred  compensation  shall  accrue  earnings  from the date of
deferral.  Earnings shall accrue at the prime rate as periodically  adjusted and
published in the Wall Street  Journal.  All such earnings  shall be deemed to be
deferred  compensation to be distributed in accordance with the terms and in the
manner set forth in this Agreement.

7. Time of Payment.

The balance of a Directors' deferred fees shall become payable either:

    a. On the first of January next following the date he ceases to be a
Director; or

    b. On the first day of January next following the Director's 65th birthday;
and

    c. On the  first  day of  January  next  following  the date of  either  the
    Director's 65th birthday and the date he ceases to be a Director,  whichever
    is  later,  as the  Director  shall  specify  at the time he  makes  his/her
    Election to Defer.

8. Installment Payments.

When the balance of a Director's  deferred  fees becomes  payable,  such balance
shall be paid in a series of approximately equal installments,  payable annually
or quarterly over a five-year or ten-year  period or the life  expectancy of the
Director  in  accordance  with the  mortality  table  in  effect  for  actuarial
equivalence under the Company Pension Plan, as the Director shall specify at the
time he makes  his/her  Election to Defer.  During the time that such balance of
deferred  fees is being paid in  installments,  earnings  shall  continue  to be
credited on the unpaid  balance as provided in  paragraph 6 hereof and until the
entire balance is fully paid.




9. Beneficiary Designation

If a Director dies before his/her fee account becomes payable,  or before he has
received the entire balance thereof,  any remaining balance thereof shall become
payable on the first day of January next following  his/her death,  and shall be
paid to his/her designated beneficiary in one lump sum. A Director may designate
a beneficiary,  and change or revoke a designation of  beneficiary,  at any time
and from time to time,  by a writing  filed with the  Secretary  of the  Company
prior to his/her  death.  If no  designation  of beneficiary is in effect at the
time of the Director's  death, or if the last designated  beneficiary shall have
predeceased the Director,  the balance of his/her deferred fees shall be paid to
the estate of the Director in one lump sum.

10. General Unsecured Obligation Only.

A Director's deferred fees and all earnings thereon shall be a general unsecured
obligation  of the  Company  and  the  Company  shall  not in any way  fund  its
liability for such deferred  Directors'  fees or earnings  thereon.  Any Company
memorandum  or record  of a  Director's  fee  account  shall be  solely  for the
Company's  internal  bookkeeping  purposes and the Director,  his/her designated
beneficiary or his/her estate shall not have any earnings whatsoever therein.

11. Compliance with Law.

This plan is intended to accomplish the authorized  deferral of the incidence of
federal  income taxes on a  Director's  deferred  fees and the earnings  thereon
until such time as the Director,  his/her beneficiary or his/her estate received
actual  payment of the same,  as  authorized  by the  Internal  Revenue Code and
applicable  law,  and this  plan  shall be  construed  in  accordance  with such
intended purpose.

12. Amendment.

This plan may be amended by the Company at any time and from time to time in the
Company's sole discretion, or terminated in its sole discretion. No amendment or
termination  of  the  plan  shall  apply  with  respect  to  a  Director's  fees
theretofore  deferred except with the Director's consent,  unless in the opinion
of legal counsel to the Company,  such  amendment or termination is necessary or
desirable to  accomplish  the purpose of this Plan or to comply with  applicable
law.

13. Effective Date.

This plan shall be effective with respect to Directors' fees earned for services
performed on and after the first day of April  following  the date of the plan's
adoption by the Company's Board of Directors.




14. Successor Company.

The Company shall not merge or consolidate  with any other company or reorganize
unless and until such  succeeding  and  continuing  company agrees to assume and
discharge  the  obligations  of the  Company  under  this Plan for  Deferral  of
Directors' Fees. Upon such  assumption,  the term "Company" as used in this Plan
shall be deemed to refer to such successor company.

15. Other Agreements Superseded.

This Plan shall  supersede any prior Plans as to  compensation  earned after the
Effective Date of this Plan. Any compensation previously deferred at the request
of a Director pursuant to any prior Plan may be designated by the Director to be
included  within the term of this Plan or, in the event no such  designation  is
made,  shall  continue to be payable in accordance  with the terms of such prior
Plan. This Plan shall not be construed to prevent the Director or any of his/her
designated   beneficiaries   from   receiving,   in  addition  to  the  deferred
compensation  provided for herein, any amounts which he may be entitled to under
any pension plan, employees' retirement plan, or any other compensation to which
he may be legally entitled as an officer or employee of the Company.