Tax

Medibank server glitch will delay tax returns for 3.8 million Australians: How businesses should respond to a crisis

Dominic Powell /

Due to a massive server glitch, Australian health insurance giant Medibank will be unable to send out end-of-financial-year payment statements to customers before July 15, causing a delay for many taxpayers hoping to lodge their annual tax returns.

This glitch has affected Medibank’s 3.8 million customers or nearly 20 percent of Australia’s population. This issue also adds to Australian’s growing list of tax time headaches, with Telstra’s recent outage already affecting thousands of taxpayers across the country.

The Australian Tax Office enforces the July 15 deadline for all health insurance providers to provide annual payment statements, which are used by taxpayers as proof that they have private health insurance. Without the statement, those taxpayers who earn above the relevant thresholds are required to pay the Medicare levy.

The glitch was caused by the company’s recent major technology upgrade, and in a statement, chief executive Craig Drummond attributed the issue to customer data migration.

“I sincerely apologise to our customers for this disruption. It is important for customers to know their personal data has not been compromised,” said Drummond.

“Our team is working around the clock to resolve this issue, and I want to assure customers that our focus is on minimising the impact this will have on them.”

Drummond told The New Daily earlier this week he was “reasonably optimistic” that Medibank had a solution to the problem, however, the solution ended up not working out.

“Even though it’s still possible that we will have members’ statements out by July 15, we wanted to be very transparent and front foot with our members, with our regulators, with the media and with our shareholders and say that we have got an issue, we’re working on it absolutely around the clock,” said Drummond.

Medibank has created a page on its website that lets customers know if they are affected by the server glitch. The website assures customers that the issue will be resolved, but discourages them from contacting Medibank customer support services.

“As you can imagine our customer care team will be very busy. We would encourage you to visit this page for the latest information, and our customer care team will have the same information,” said the company.

The page also says Medibank does not know when the issue will be resolved.

“We can’t tell right now when impacted members will receive their statement but please be assured we are working as hard as we can to minimise any delay,” the company said.

How businesses should respond in a crisis

Crisis communications expert Nicole Matejic told SmartCompany Medibank has handled the situation well, mentioning that the company has been accused of “overcommunicating” at times.

“What Medibank has done is the best move they could have made, it shows that they’re very savvy when it comes to communicating with customers,” Matejic says.

“It’s important that customers feel communicated with, and keeping transparent like Medibank has is an honest way to conduct business.”

Matejic says Medibank’s regular statements to customers, along with its dedicated information page, is the “best strategic action to take”.

“There are a lot of people waiting, so it’s best to keep the updates coming for customers,” she says.

While Medibank may be concerned about consumer confidence after this issue, Matejic says she is “hedging her bets” that the aftermath won’t be too bad.

“It is difficult to see how much of an issue this will cause Medibank, people could lose money and it could cause cash flow issues for some businesses,” she says.

“Medibank does have a history of doing silly things. Their recent change in leadership has shown a move towards better communication, and I think people will respect that and hang in there with them.”

SmartCompany contacted Medibank and was told there was no further update at time of publication.

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Dominic Powell

Dominic is the features and profiles editor at SmartCompany. Email him at [email protected].