Understanding the Significant Cost Threshold (SCT) in Australian Visa Applications

Introduction

The Significant Cost Threshold (SCT) is one of the most misunderstood parts of Australia’s visa health framework. Clients often tell me, “But I’m healthy enough to work,” or “We’ll pay privately so it won’t cost the government anything.” In reality, the health assessment asks a very specific policy question: “If a hypothetical person in the same circumstances as you were granted the visa, would their likely health-related services during a defined period be expected to impose a cost to the Australian community above a certain threshold?” That threshold is the SCT.

As an immigration lawyer, I’ve guided families, skilled professionals, and employers through SCT issues—from first medicals to complex PIC 4007 health waivers. This article explains, in plain Australian English, how the SCT works, why it can lead to refusals even for people who feel well, and what you can do to legally strengthen your case. I also cover the practical differences between PIC 4005, 4006A and 4007, provide case studies, and give you a step-by-step checklist to stay organised.

Key point: The SCT is a predictive cost model, not a personal judgement about your value. Understanding the model—and responding with focused evidence—often changes outcomes.

What Is the Significant Cost Threshold?

The SCT is a dollar figure used by the Department of Home Affairs to decide whether an applicant’s likely health-related costs to the Australian community are “significant.” If the Medical Officer of the Commonwealth (MOC) forms the view that, over the relevant period, your condition would generate health, community service, or disability support costs exceeding the threshold, you may fail the health criteria attached to your visa class—unless a health waiver is available and exercised.

Because the threshold is periodically updated and published through policy channels, applicants should always work off the current figure. The SCT historically moved in steps to reflect policy settings and price indexation. It is not the same thing as your private capacity to pay or maintain insurance. The test looks at potential costs to government-funded systems if a person in your situation accessed services in Australia in the ordinary way.

Three quick realities I share with clients at the outset:

• Private health insurance does not neutralise the SCT. The model counts likely costs to public systems if the person were to use them.
• Intention to “never use services” carries little weight. The test is objective and hypothetical, not subjective and aspirational.
• Household income or personal savings are not, by themselves, determinative under PIC 4005/4006A. They matter mainly in a PIC 4007 waiver context (public-interest balancing).

How Case Officers Calculate SCT (Plain English)

Health findings are made by the MOC. Case officers rely on the MOC’s opinion and cannot substitute their own medical view. The steps look like this:

1. Condition identification: The panel physician records diagnosed conditions, functional impacts, medication, and prognosis. For dependants, paediatric development and therapy needs are noted.
2. Reference costs & service mix: The MOC uses benchmark schedules (for example, hospital episodes, pharmaceuticals, community supports, special education, allied therapies) linked to national or state schemes.
3. Time horizon: Costs are projected over a set period (often the visa validity or a statutory period such as 5 or 10 years depending on the visa class and policy). For permanent visas, longer horizons are common.
4. Annualised model: The MOC estimates annual usage—visits, interventions, care hours—multiplies by standard costs, adjusts for severity and adherence, and totals the projection.
5. Compare to SCT: If projected costs exceed the threshold, the MOC will record that the health criterion is not met (subject to any available waiver pathway).

Applicants rarely see each line item behind the projection, but you are entitled to respond with evidence addressing both the clinical and service-use assumptions. Where a waiver exists, we move beyond “pass/fail” to a structured public-interest case.

Which Health Public Interest Criteria Apply? (PIC 4005, 4006A, 4007)

Most health decisions are made under one of three Public Interest Criteria (PICs). They each interact with the SCT differently:

• PIC 4005 (no waiver): health must be met outright. If the MOC says the SCT is exceeded, refusal risk is high because there is no balancing discretion.
• PIC 4006A (sponsor undertakings): relevant to some employer visas; focuses on whether the employer can meet significant costs. Still limited in scope.
• PIC 4007 (waiver available): used for many family and some skilled streams; allows the decision maker to waive the adverse health finding if granting the visa is justified in the circumstances, taking account of mitigating factors and likely costs.

Knowing which PIC applies is step one in any SCT strategy. With PIC 4005, the battle is primarily medical and actuarial. With PIC 4007, we address the medical model and present a comprehensive public-interest case to justify the waiver.

Health Assessment Process – Who Does What and When

The Department also issues policy guidance on protecting health care and community services. Understanding that policy intent helps anchor submissions.

Evidence, Reports & Submissions That Actually Help

When I prepare an SCT file, I split the task into clinical accuracy and public-interest balance:

Clinical accuracy (addressing the MOC projection)

• Specialist reports: independent, recent, and tailored to Australian treatment protocols. Generic letters carry little weight.
• Therapy plans & education supports: realistic frequency, provider type, and duration. Avoid wish-lists.
• Medication regimens: dose stability and lower-cost equivalents. Note if a drug is PBS vs private.
• Functional capacity evidence: how the person actually functions at home/school/work with existing supports.

Public-interest balance (for PIC 4007)

• Private funding & insurance: show credible capacity and history of paying for supports without public subsidy.
• Family/community support: practical arrangements that reduce service demand (e.g., respite, transport, in-home care).
• Economic & social contribution: employment, tax, skills in shortage, carer roles, community engagement.
• Compassionate factors: continuity of care, educational stability, lack of equivalent services offshore.

Submissions must be respectful to the MOC’s statutory role. We don’t argue “the doctor is wrong” in a general sense; we demonstrate why specific assumptions about frequency, duration, or modality lead to an over-estimate—and we evidence our alternative view.

The PIC 4007 Health Waiver – Strategy, Myths & Missteps

PIC 4007 empowers a delegate to grant a visa despite adverse health findings if the grant is justified in the circumstances. It’s not automatic and not available for all visas. Where it applies, we run a two-layer case:

1. Layer 1 – Refine the projection: clinical evidence narrows or corrects the MOC’s service-use assumptions.
2. Layer 2 – Public interest balance: demonstrate why, even if some costs remain above the SCT, the overall balance of compassionate, economic, and social factors justifies approval.

Common myths I correct weekly:

• Myth: “If we buy top private insurance, we pass.”
  Reality: Private insurance helps the balance, but the model still considers potential public costs.
• Myth: “A promise to never use public services will convince the Department.”
  Reality: Undertakings like that hold little weight; decision makers apply an objective model.
• Myth: “One glowing character reference wins a waiver.”
  Reality: Waivers turn on documented cost mitigation and strong public-interest grounds, not sentiment alone.

In a good waiver brief, I index every document, cross-reference evidence to the cost categories, and clearly show how the household will manage care sustainably without unreasonable reliance on public systems. Where available, I also evidence continuity with existing Australian providers—because stability often reduces future costs.

Comparison Tables (PICs & SCT History)

PIC 4005 vs 4006A vs 4007

Illustrative SCT History (policy context)

The exact dollar figure is updated in policy materials and ministerial settings from time to time. Treat online commentary with caution and verify recency.

Real-World Case Studies (Anonymised)

Case 1 – Child on the spectrum, partner visa with PIC 4007

The MOC projected high therapy and education support costs above the SCT. We commissioned a contemporary multidisciplinary report aligning supports to the child’s demonstrated progress and realistic Australian practice. We then built a waiver case: family income, private therapy funding, stable school placement, and community care arrangements. The delegate exercised PIC 4007 and granted.

Case 2 – Skilled applicant with cardiac history under PIC 4005

No waiver available. The MOC assumed a high likelihood of hospital readmissions. Our cardiology expert documented treatment response, risk reduction, and low expected utilisation given current regimen. We provided Australian guideline references. The revised opinion fell below the SCT and the visa was granted.

Case 3 – Employer-sponsored family, PIC 4006A

The spouse required ongoing biologic therapy. We demonstrated the sponsoring employer’s capacity to meet costs under the criterion, detailed salary packaging, and private funding history. The file met PIC 4006A on the evidence.

Case 4 – Post-refusal AAT review with new paediatric evidence

At the AAT, we challenged service-mix assumptions and filed updated functional assessments. The Member accepted a materially lower utilisation profile. The matter was remitted for reconsideration and approved.

Readiness Checklist for SCT-Affected Applicants

• Confirm which PIC applies to your visa subclass before planning your evidence.
• Get current specialist reports that reference Australian standards and realistic service frequency.
• Document actual usage over the last 12–24 months (appointments, therapy hours, medications).
• Identify cost mitigations: private insurance, employer supports, NDIS ineligibility/position (where relevant), family care capacity.
• Prepare a succinct submission mapping evidence to the assumed cost categories.
• If waiver is available (PIC 4007), build a public-interest narrative: contribution, compassion, continuity, community benefit.
• Keep an index and label every document clearly. Decision-ready files read faster and better.
• If refused, diary AAT time limits immediately and seek advice on review vs re-apply strategy.

Related Guides & Official Resources

• Visa Refusal & AAT Appeal – Lawyer Guide
• Partner Visa Medicals & Health Waiver (PIC 4007)
• Home Affairs – Protecting Health Care & Community Services
• Home Affairs – Review of Australia’s Visa Significant Cost Threshold

Frequently Asked Questions

What exactly is the Significant Cost Threshold?

It’s the policy dollar amount used to decide whether the likely health-related costs of a visa applicant (or their dependant) would be “significant” for the Australian community over a defined period. If projected costs exceed the threshold, the health criterion may not be met unless a waiver applies and is exercised.

How do decision makers calculate costs against the SCT?

The MOC estimates service usage (hospital, medicines, therapies, community supports, special education) using standard cost schedules and multiplies by the time horizon relevant to your visa class. The total is then compared with the SCT figure current at the time of decision.

Does private health insurance mean I pass the SCT?

No. Insurance helps in a waiver context by showing cost mitigation, but the base model remains a community-cost test. The question is not what you intend to claim; it’s what a person in your circumstances would likely cost the public systems if they used them in the ordinary way.

Which visas allow a PIC 4007 health waiver?

Many family visas and some skilled streams include PIC 4007. Some visa subclasses apply PIC 4005 (no waiver) or PIC 4006A (sponsor capacity). Always confirm the criterion for your subclass before planning your evidence.

What helps most in a PIC 4007 waiver submission?

Two things: (1) credible clinical evidence that narrows the projected service mix and (2) a public-interest case showing how granting your visa is justified—economic contribution, compassionate circumstances, continuity of care, community benefit, and realistic private funding arrangements.

My child needs therapies. Are school-based supports counted?

The model can include publicly funded education supports where relevant. Provide clear reports on actual need, frequency, progress, and what the family funds privately to reduce demand on public systems.

Can we appeal if refused on SCT grounds?

Onshore refusals often carry AAT rights. At the AAT we can challenge assumptions and file new clinical evidence that existed at the time of decision, and—if the subclass allows—develop a stronger waiver case. Time limits are strict; get advice quickly.

Should I reapply instead of appealing?

If your best new evidence arises after the decision (for example, therapy needs have stabilised, medication has changed, or a private funding plan is proven over time), a fresh application can be more effective than a review tied to the earlier record. We frequently design dual-track strategies.

Is the SCT the same for everyone?

The threshold is a single policy figure applied across cases, but the projection of services is individualised. Two applicants with the same diagnosis can have different outcomes based on function, therapy response, and credible mitigation.

Will paying a levy or bond help?

Bonds/levies are not part of the SCT framework. What matters is evidence that realistically reduces likely draw on public systems and a convincing, lawful justification for grant where a waiver exists.

Book a Consultation

If the SCT is flagged in your case, the worst approach is guesswork. I will map the exact health criterion that applies to your visa, obtain targeted clinical evidence, and—where available—prepare a disciplined PIC 4007 waiver submission that balances costs against compelling public-interest grounds. If a waiver is not available, we focus on the medical model itself and correct unfounded assumptions with expert material aligned to Australian practice.

Book a consultation and let’s build a decision-ready file that a case officer can read, trust, and approve.

Legal Disclaimer
By Nilesh Nandan — Australian Immigration Lawyer, MyVisa®️ Immigration Lawyers

This blog is intended for discussion purposes only and does not constitute advice. You should seek independent legal advice before relying on any information provided on this site. Immigration policies, systems, and processes can change without notice. I’d like to know your own experience with the immigration challenges noted above — feel free to contact me.

MyVisa: Nilesh Nandan, Attorney at Law
BBus(Accy) LLB(QUT) GDLP MBA(IntBus)
Head of Practice