Iraq and Afghanistan veterans with post-traumatic stress disorder could qualify for lifetime disability retirement benefits under a proposed settlement. Rafiq Maqbool, Associated Press

More than a thousand Iraq and Afghanistan veterans in the United States with post-traumatic stress disorder would be given lifetime disability retirement benefits such as military health insurance under the terms of a settlement reached between the government and the veterans.

Attorneys for the veterans, the U.S. Justice Department and the military jointly filed a motion on Thursday that spelled out the terms. The settlement must be approved by a judge to be final.

It also affects another thousand veterans who already had lifetime retirement benefits, but would receive a higher disability rating from the military. All of the veterans affected by the settlement would potentially receive new monthly disability compensation.

The settlement stems from a 2008 class action lawsuit filed in the U.S. Court of Federal Claims in Washington by veterans unable to serve, at least in part, because of the anxiety disorder who said they were illegally denied benefits.

The law requires the military to give a disability rating of at least 50 per cent to troops discharged for PTSD, but each of the plaintiffs received a disability less than that, said Bart Stichman, co-executive director of the National Veterans Legal Services Program, a nonprofit organization that represented the veterans.

As part of the lawsuit, the military in January 2010 said it would expeditiously review the cases. But attorneys for the veterans grew concerned about the pace in which the cases have been reviewed by military boards. One of the boards reviewing the cases was moving so slow, it was going to take seven years for all the cases to be reviewed, Stichman said. That led to settlement talks.

Timothy Martin, 32, a former specialist in the Tennessee National Guard, who struggles with panic attacks and nightmares related to his war service in Iraq, would benefit from the settlement. He said the health care benefits from the settlement would help with health care for his kids, ages 2 and 5.

"The extra money, the back pay, the insurance, it's going to really help change our lives," Martin said.

Each of the veterans in the suit was released from the military between Dec. 17, 2002, and Oct. 14, 2008.

PTSD is an anxiety disorder that can develop after a terrifying event in which a person felt physically harmed or threatened.