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Hi, Has anybody heard of this and if so which is the best way to apply.                                                                       

If you are registered to work in Spain and paying social security contributions, then you will be covered for state healthcare.
If you are not, but earn less than €100,000 you can register for healthcare as a Spanish resident through your local INSS. You can also access Spanish state healthcare by paying into a special monthly ‘pay-in’ public health insurance scheme (convenio especial); read more about Spanish health insurance. These are run individually by each of the autonomous regions. Monthly fees are €60 for under 65s and EUR 157 for 65+.
Note: once you are resident in Spain you cannot use a European Health Insurance Card (EHIC) unless you are a student.
To access state healthcare you need to take along your national health system user’s card (tarjeta de usuario del Sistema National de Salud).
For more information, see Expatica’s articles on healthcare in Spain.

Thanks