If your A/C compressor is seized or broken internally I can see that the compressor, condenser, drier, and expansion valve will need to be replaced. In addition flushing all the lines and evaporator will be required. I can see this getting to the $1500 or more range.
You should be able to have the A/C system disabled so you can use your heater or defrost this winter.
As for why it happened, well, the car has 109,000 miles on it. Moving parts fail. It happens.
And yes, according to Subaru your car is due for the routine scheduled maintenance timing belt service.