[BUG] "Usage credits required for 1M context" error persists after plan recharge on VS Code extension

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?

After my Claude Pro plan expired and I recharged/renewed it, the error API Error: Usage credits required for 1M context continues to appear in the VS Code extension. The error persists even after recharging — suggesting the issue is not related to credit balance but to model selection or session state.

What Should Happen?

Expected Behavior

After renewing the plan, Claude Code should resume normal operation without requiring additional steps or manual model overrides.

Actual Behavior

Error persists after recharge. Claude Code is blocked in the VS Code extension. The error appears to fire before model selection is processed.

Error Messages/Logs

API Error: Usage credits required for 1M context · turn on usage credits at claude.ai/settings/usage, or use --model to switch to standard context

Steps to Reproduce

Steps to Reproduce

1. Use Claude Code with VS Code extension on a Pro plan
2. Plan expires → error appears (expected)
3. Recharge/renew the Pro plan
4. Relaunch VS Code / Claude Code extension
5. Error still appears — Claude Code is completely blocked

Claude Model

Sonnet (default)

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.159

Platform

Other

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

This appears related to issues #62063, #62199, #63060, #63896 where Claude Code defaults to a 1M context model regardless of user plan or configuration. However, those issues don't specifically address the case where the error continues after a plan recharge, which may indicate a session/auth cache not refreshing after billing renewal.