Session becomes permanently unusable after rate limit error, even though limit is available

Description

After encountering a rate limit error, the current session becomes permanently blocked/unusable. However, creating a new session works fine, suggesting the rate limit isn't actually exceeded — the session itself gets stuck in a broken state.

Steps to Reproduce

1. Use Claude Code normally in a session
2. Hit the rate limit error: "You've hit your limit · resets Apr 1 at 9am (Asia/Tokyo)"
3. The /rate-limit-options menu appears with options to "Stop and wait" or "Request more"
4. After this point, the session is permanently unusable
5. Creating a new session works perfectly fine

Expected Behavior

• If the rate limit is not actually exceeded, the session should continue working
• If the rate limit IS hit, the session should recover after the limit resets, not remain permanently blocked
• At minimum, the session should not become permanently unusable — it should be possible to continue after the limit resets

Actual Behavior

• Session becomes permanently blocked after rate limit error
• New sessions work fine (proving the limit isn't actually reached)
• This breaks workflow continuity since all conversation context from the blocked session is lost
• User has to start fresh in a new session, losing all prior context

Impact

• Loss of conversation context and continuity
• Forces user to re-establish context in a new session
• Disruptive to ongoing multi-step work

Environment

• Claude Code CLI
• Timezone: Asia/Tokyo
• Has active usage plan with limits

Screenshot

The error shows:

● Searched for 1 pattern (ctrl+o to expand)
  └ You've hit your limit · resets Apr 1 at 9am (Asia/Tokyo)

✱ Cooked for 48s

> /rate-limit-options

What do you want to do?

  > 1. Stop and wait for limit to reset
    2. Request more