Individual payouts would be capped at $5 million for men with Alzheimer's disease; $4 million for those diagnosed after their deaths with a brain condition called chronic traumatic encephalopathy; and $3 million for players with dementia, said lead plaintiffs' lawyer Christopher Seeger.
The settlement does not include an admission from the NFL that it hid information from players about head injuries. Commissioner Roger Goodell told pro football's lawyers to "do the right thing for the game and the men who played it," according to a statement by the league.
Goodell was not made available for comment.
The NFL has annual revenue of about $9 billion.
In addition to Dorsett, the plaintiffs include Super Bowl-winning quarterback Jim McMahon, who suffers from dementia; former running back Kevin Turner, who has amyotrophic lateral sclerosis, or Lou Gehrig's disease; and the family of All-Pro selection Junior Seau, who committed suicide last year.
Turner, who played for the New England Patriots and Philadelphia Eagles, predicted that most of his peers would support the settlement.
"Chances are ... I won't make it to 50 or 60," said Turner, now 44. "I have money now to put back for my children to go to college and for a little something to be there financially."
All former NFL players are eligible to seek care, screening or compensation, whether they suffered a documented concussion or not. The amounts they receive will be based on their age, condition and years of play. They do not need to prove that their health problems are connected to playing football.
Players' lawyers said they expect the fund to cover the ex-athletes' expenses up to age 65. Current players are not covered.
If the settlement holds, the NFL won't have to disclose internal files that might reveal what it knew, and when, about concussion-linked brain problems.