Costa was handed the lengthy suspension by the Spanish Football Federation (RFEF) on Thursday for directing a crude insult towards referee Gil Manzano during the first half of Atletico's 2-0 defeat to Barcelona last weekend.
Manzano, who sent Costa off in the 28th minute, also reported Costa had "grabbed" him by the arms during the incident.
"It seems harsh to me," Simeone said at a press conference on Friday.
The punishment means Costa will not play again this season as Atletico have seven games left in La Liga, having been knocked out of the Champions League and Copa del Rey.
But Simeone insists Costa still has a future at the club.
"Absolutely yes, you know what I think of Costa," Simeone said. "We must take care of our own and with Costa, now more than ever."
Atletico president Enrique Cerezo suggested on Thursday the club will appeal against the ban.
"It's bad news," Cerezo said. "The natural thing is for us to appeal, to ask for leniency and see what happens.
"There are players who are very temperamental. Insults should never happen on the football field but there are times when they do happen."
According to the match report submitted by Manzano, Costa insulted his mother in a foul-mouthed outburst before "grabbing me by the arms to prevent me showing cards to numbers 24 and 2 respectively".
The RFEF ruled Costa should therefore be suspended for four matches for "clear insults and offensive expressions made by the player towards the referee" and another four, after "meeting the referee with mild violence, without aggressive spirit, but in a manner that is reflected in the act of grabbing".
Costa's dismissal meant Atletico had to play for more than an hour with 10 men in a match Simeone had said they had to win to keep their title hopes alive.
Instead, defeat leaves them 11 points adrift of Barca at the top of the table.
Atletico play at home to Celta Vigo on Saturday and will also be without their captain Diego Godin.
Godin missed the team's final training session on Friday with a thigh injury.