Simmons, a third-round pick in the 2016 draft who is set to enter his fifth season, was poised to be an unrestricted free agent, but Broncos president of football operations/general manager John Elway said at the combine he would use the franchise tag to retain him if a long-term contract couldn't be reached.
Simmons, who turned 26 last November, played at a Pro Bowl level in his first year in Vic Fangio's system. He was tied for second on the team with 93 tackles and led the team with four interceptions and 15 passes defensed.
He was the Broncos' nominee last season for the Walter Payton Man of the Year award.
The Broncos know re-signing Simmons for the long term will take elite money. The five highest-paid safeties in the league all have contracts that average between $14 million and $14.6 million. The Broncos are scheduled to have more than $60 million worth of salary-cap space.
During Elway's tenure as the Broncos' top football executive, all four players under the franchise tag -- tackle Ryan Clady, kicker Matt Prater, receiver Demaryius Thomas and linebacker Von Miller -- signed a long-term deal before the deadline had passed.
Simmons has started 48 games in his career, including 16 starts in each of the past two seasons. Simmons has also played every defensive snap in each of the past two seasons. He has 11 interceptions, 28 passes defensed and 2 sacks in his career.
ESPN's Jeff Legwold contributed to this report.