The SNP Government has set aside £5 million of funding for councils to ensure the costs of social care are not deducted from pensions and military compensation, which are now exempt from financial assessment.
Veterans who were injured in service before April 2005 are provided with a war disablement pension in compensation. If these veterans have or develop social care needs, this compensation could be taken to pay for their care.
A campaign by armed forces charity Poppyscotland highlighted the issue.
Patricia Gibson MP said:
"Armed forces veterans are a true asset to our society and it is right that we look after them as they did us, which is why the SNP Government has have made this money available.
"Pensions are an important source of income for many and ensuring that veterans receive the full amount they are rightfully entitled to will make their life that little bit easier.
"We want to make the social care system fairer, which is why we continue to make changes to charging and are also undertaking a feasibility study into the extension of free personal care to under-65s."
Poppyscotland chief executive Mark Bibbey said:
"Together with our colleagues in the Royal British Legion, we launched our Insult to Injury campaign in February 2015 and thanks to the public support it garnered, the SNP Government very quickly engaged with Poppyscotland to find a way of addressing this historic discrepancy.
"We are extremely grateful they have committed this funding and our thanks also go to our supporters who helped us raise awareness of our Insult to Injury campaign."