MID ATLANTIC MEDICAL SERVICES, INC.
                          SENIOR MANAGEMENT BONUS PLAN

1.   Purpose.  The Mid Atlantic Medical  Services,  Inc. Senior Management Bonus
     Plan is intended to increase  incentives for eligible  executives to attain
     and maintain the highest  standards of  performance,  to attract and retain
     key  executives of  outstanding  competence  and ability,  to stimulate the
     active interest of key executives in the development and financial  success
     of the Company,  to further the  identity of  interests  of employees  with
     those of the Company's  stockholders generally and to reward executives for
     outstanding performance when certain objectives are achieved.

2.   Definitions.  As used  herein,  the terms set forth  below  shall  have the
     following respective meanings:

(a)  "Board" means the Board of Directors of the Company.

(b)  "Bonus" means an award payable under this Plan.

(c)  "Bonus  Period" means the calendar year beginning on or after the Effective
     Date with respect to which the Bonus is to be paid.

(d)  "Business Criteria" means the business criteria listed in Section 6 of this
     Plan.

(e)  "Code"  means the Internal  Revenue  Code of 1986,  as amended from time to
     time.

(f)  "Committee"  means the Committee  appointed by the Board to administer  the
     Plan.  The Committee  shall be  constituted  at all times so as to meet the
     outside director requirements of Section 162(m) of the Code.

(g)  "Company" means Mid Atlantic Medical Services, Inc. and its subsidiaries.

(h)  "Effective Date" means January 1, 2000.

(i)  "Eligible  Executives"  means all  employees of the Company  classified  in
     Level 18 or above or any successor designation.

(j)  "Participant"   means,  with  respect  to  a  Bonus  Period,  the  Eligible
     Executives  selected by the Committee to be eligible to receive a Bonus for
     such Bonus Period as provided in Section 5 of this Plan.

(k)  "Performance  Objective"  means the  performance  objective  or  objectives
     established pursuant to Section 5 of the Plan.

(l)  "Plan" means the Mid Atlantic  Medical  Services,  Inc.  Senior  Management
     Bonus Plan.

(m)  "Restricted  Officers" means the Chief Executive Officer of the Company and
     its four  highest  compensated  officers  (other  than the Chief  Executive
     Officer) as defined in Treasury Regulation 1.162-27(c)(2).

3.   Administration.  The Committee shall interpret the Plan, prescribe,  amend,
     and rescind rules relating to it, select  eligible  Participants,  and take
     all other actions necessary for its administration,  which actions shall be
     final and binding upon all Participants.

4.   Compliance  with Section  162(m).  The Plan shall be administered to comply
     with Section 162(m) of the Code and regulations promulgated thereunder, and
     if any Plan provision is found not to be in compliance  with Section 162(m)
     of the Code,  the provision  shall be deemed  modified as necessary to meet
     the requirements of Section 162(m) of the Code. Notwithstanding anything in
     the Plan to the contrary,  the Committee,  in its absolute discretion,  may
     bifurcate the Plan so as to restrict, limit, or condition the applicability
     of any provision of the Plan to Restricted Officers without so restricting,
     limiting, or conditioning the Plan with respect to other Participants.

5.   Selection  of  Participants  and  Performance   Objective.   Prior  to  the
     commencement  of each Bonus  Period,  or at such later time as permitted by
     Section 162(m) of the Code and regulations thereunder,  the Committee shall
     determine in writing (i) the  Participants who shall be eligible to receive
     a Bonus for such Bonus Period, (ii) the Performance Objective,  which shall
     be a  relative  or  absolute  measure  of any one or  more of the  Business
     Criteria,  and (iii) the formula for  computing the amount of Bonus payable
     to each Participant if the Performance  Objective is achieved (such formula
     shall  comply  with  the  requirements   applicable  to   performance-based
     compensation plans under Section 162(m) of the Code).

6.   Business  Criteria.  The Business Criteria will include specified levels of
     one or more of the following:

     Operating Income                             Net Income
     Pre-Tax Income(1)                            Earnings Per Share
     Cash Flow                                    Return on Investment
     Return on Capital                            Revenue
     Return on Equity                             Total Shareholder Return
     Return on Assets                             Membership in Company Products
     Membership in HMO Product                    Membership in ASO Product
     Membership in Medicare Product               Membership in Medicaid Product
     Membership in Indemnity Product              Membership in PPO Product

The above  terms  shall  have the same  meaning  as in the  Company's  financial
statements,  or if the terms are not used in the Company's financial statements,
as applied pursuant to generally accepted accounting  principles,  or as used in
the  industry,  as  applicable.  As determined  by the  Committee,  the Business
Criteria shall be applied (i) in absolute terms or relative to one or more other
companies or indices and (ii) to a business unit, geographic region, one or more
separately incorporated entities, or the Company as a whole).

7.   Bonus  Certification.  The  Committee  shall  certify in  writing  prior to
     payment of the Bonus that the  Performance  Objective has been attained and
     the Bonus is payable.  With  respect to Committee  certification,  approved
     minutes of the meeting in which the  certification is made shall be treated
     as written certification.

8.   Maximum  Bonus  Payable.  The maximum  Bonus payable under this Plan to any
     Participant for any Bonus Period shall be $1 million. In no event shall the
     aggregate  Bonuses payable to all  Participants for any Bonus Period exceed
     10% of the Company's  average  annual income before taxes for the preceding
     five years (such  calculation  shall be in accordance  with Rule 452 of the
     New York Stock Exchange).

9.   Discretion  to  Reduce  Awards.  The  Committee,  in its sole and  absolute
     discretion,  may  reduce  the  amount of any award  otherwise  payable to a
     Participant.

10.  Active Employment  Requirement.  Except as provided below, a Bonus shall be
     paid for a Bonus Period only to a Participant  who is actively  employed by
     the Company (or on approved  vacation or other  approved  leave of absence)
     throughout  the Bonus Period and who is employed by the Company on the date
     the Bonus is paid.  To the  extent  consistent  with the  deductibility  of
     awards under Section  162(m) of the Code and  regulations  thereunder,  the
     Committee may in its sole discretion  grant a Bonus for the Bonus Period to
     a  Participant  who is first  employed  or who is  promoted  to a  position
     eligible to become a  Participant  under this Plan during the Bonus Period,
     or whose  employment is terminated  during the Bonus Period  because of the
     Participant's  retirement with  entitlement to immediate  pension  benefits
     under the Company's  retirement  plan,  death,  or because of disability as
     defined in Section 22(e)(3) of the Code. In such cases of active employment
     for part of a Bonus  Period,  a pro rata  Bonus  may be paid for the  Bonus
     Period.

11.  Payment of Bonus.  A Bonus shall be paid to the  Participant  for the Bonus
     Period as  provided in this Plan.  The  Company  shall pay the Bonus to the
     Participant   in  a  single  cash  payment  as  soon  as   administratively
     practicable  after the Bonus Period and after the Committee  certifies that
     the  Bonus  is  payable  as  provided  in  Section  7. In the  event of the
     Participant's incompetency,  the Company in its sole discretion may pay any
     Bonus to the Participant's guardian or directly to the Participant.  In the
     event  of  the  Participant's  death,  any  Bonus  shall  be  paid  to  the
     Participant's spouse or, if there is no surviving spouse, the Participant's
     estate.  Payments under this Section shall operate as a complete  discharge
     of the Committee  and the Company.  The Company shall deduct from any Bonus
     paid under the Plan the amount of any taxes  required to be withheld by the
     federal or any state or local government.

12.  Stockholder  Approval. No Bonus shall be payable under this Plan unless the
     Plan is  disclosed to and  approved by the  stockholders  of the Company in
     accordance with Section 162(m) of the Code and regulations thereunder.

13.  Limitation  of Rights.  Nothing in this Plan shall be construed to (a) give
     any  employee  of the  Company any right to be awarded any Bonus other than
     that  set  forth  herein,  as  determined  by  the  Committee;  (b)  give a
     Participant any rights whatsoever with respect to shares of common stock of
     the Company;  (c) limit in any way the right of the Company to terminate an
     employee's  employment with the Company at any time; (d) give a Participant
     or any other person any  interest in any fund or in any  specific  asset or
     assets  of  the   Company;   or  (e)  be  evidence  of  any   agreement  or
     understanding, express or implied, that the Company will employ an employee
     in any particular position or at any particular rate of remuneration.

14.  Nonassignment. The right of a Participant to the payment of any Bonus under
     the Plan may not be assigned,  transferred,  pledged,  or  encumbered,  nor
     shall such right or other interests be subject to attachment,  garnishment,
     execution, or other legal process.

15.  Amendment or  Termination of the Plan. The Committee may amend or terminate
     the Plan at any time, except that no amendment or termination shall be made
     that would  impair the rights of any  Participant  to a Bonus that would be
     payable were the Participant to terminate  employment on the effective date
     of such amendment or termination,  unless the Participant  consents to such
     amendment or termination. The Plan shall automatically terminate on January
     1, 2005 unless sooner terminated by action of the Committee.

16.  Governing  Law.  The Plan  shall be  governed  by the laws of the  State of
     Delaware other than the conflict of laws provisions thereof.



(1)  Defined as pre-tax income before expansion or acquisition costs, charges or
     credits  not  related to  current  year  operations  and prior to return of
     physicians' withhold and physicians' bonuses.