[BUG] Claude Code defaults to API key billing despite active Max subscription

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

same email/account had Max plan + Claude Code created a brand new API key on first setup, burned $13.99 in a day before being noticed, and there was no in-product warning that the Max plan wasn't being used.

What Should Happen?

this burnt extra even after max plan. injected api key without any alert and consumed from that

Error Messages/Logs

Steps to Reproduce

Description

Claude Code silently routes usage through a newly-created API key instead of the active Max subscription on the same account, causing per-token billing while the subscription sits unused. There is no in-product warning that the Max plan is being bypassed.

Steps to reproduce

1. Have an active Claude Max plan on your Anthropic account
2. Install the Claude Code extension in VSCode (fresh install)
3. Launch Claude Code for the first time
4. When prompted for authentication, select the "Use API key" path
5. Claude Code creates a new API key in the Anthropic console under a "Claude Code" workspace
6. Begin using Claude Code normally (chat, edits, agent tasks)

Expected behavior

• Claude Code should detect the active Max subscription on the same account and default the auth flow to "Sign in with Anthropic account"
• If the user explicitly picks the API key path, show a clear warning:

> "You have an active Max plan. Using an API key will bill per token separately and bypass your subscription. Continue?"

Actual behavior

• Claude Code silently routes all usage through the new API key
• No warning that the Max plan is being bypassed
• API credits get consumed per token while the Max subscription sits unused
• In my case, a non-trivial amount was burned in a single day before I noticed it in the console usage page

Environment

• OS: macOS (Darwin 25.4)
• Editor: VSCode + Claude Code extension
• Plan: Active Claude Max ($200/month)

Impact

Max plan subscribers are silently double-paying — once for the subscription, and again per token via an auto-created API key — with no in-product indication. This is especially confusing because the default workspace name ("Claude Code") makes the key look official/expected.

Suggested fix

1. On first auth, check if the signed-in account has an active subscription. If yes, default to subscription auth.
2. If user manually picks API key path while a subscription is active, show a confirmation dialog explaining the billing implications.
3. Add a visible indicator in the Claude Code status bar showing which auth mode is active (e.g. "Max" vs "API key").

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

Claude Code extension: v2.1.92 (also have v2.1.90 installed)

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_