when does the O2 sensor need to be replaced?

What prompts you to believe the O2 sensor is at fault?

My impression is that you are not getting clear information from your visit to the dealership in the first place. Carefully review your repair order and invoice, and ask questions of the consultant you worked with. In their hands, your concern should be appropriately diagnosed and troubleshooting should reveal the root cause of the check engine light coming on. No one should be spending any time guessing on anything, least of all an "O2 sensor".