Abstract Objective Time in range (TIR) is an important metric to measure variability of blood glucose levels. The aim is to quantify the long‐term health benefits and economic return associated with improved TIR for individuals with type 2 diabetes (T2D). Method A Markov model with three states (T2D, T2D with cardiovascular disease (CVD) and death) estimated 20‐year medical costs, quality‐adjusted life‐years (QALY) gained and CVD risk under four TIR scenarios: >85%, 71%–85%, 51%–70% and ≤50%. The T2D population was identified using the National Health and Nutrition Examination Survey, and model parameters were sourced from literature. Costs were estimated from a healthcare sector perspective and standardized to 2021 US dollars. Cost ceilings were determined using three willingness‐to‐pay (WTP) thresholds: $100 000/QALY, $50 000/QALY and $0/QALY (cost‐saving). Results Compared to TIR <50%, improving TIR to 51%–70% resulted in a 0.79 QALY increase and 4.91% CVD risk reduction; to 71%–85%, a 0.95 QALY increase and 6.24% CVD risk reduction; to >85%, a 1.18 QALY increase and 8.75% CVD risk reduction. To be cost‐effective at $100 000/QALY, annual costs for TIR improvements from <50% to 51%–70%, 71%–85% and >85% should be <$1148, $4200 and $7252, respectively. To be cost‐saving, these costs should be <$612, $2816 and $5021. Conclusion Improving TIR yields significant health benefits. We calculated feasible medical cost allocations for TIR improvements, informing the implementation of interventions like continuous glucose monitoring devices.