If you ask ten people about anything here in Spain you will get ten different answers. It is certainly the case with health care. Although I am no expert in this field this is my understanding:-
If you are a pensioner (or a dependant)or were receiving incapacity benefit in the UK then life is relatively simple. You apply for a Form E121 from England; take it to the Health Centre and you will get a SIP card. At first it will be a temporary card followed later by a plastic version. This covers you for life and in the case of pensioners means you get free prescriptions.
If you are working in Spain life is simple. You pay into the National Health Service and therefore get a SIP card which again provides you with free health care.
If you fall into neither group but were paying National Health contributions in England for 3 years prior to moving to Spain you are eligible for Form E106 which covers you for two years. Alternatively you get an E111 which covers you for a year.
After that if you are neither a pensioner (or dependant) nor working in Spain you pay for your medical care normally via medical insurance.
Your eligibility for free health care has nothing to do with whether you have residency in Spain or not. Previously on the Costa Blanca you had to have applied for residency for them to accept your E121 but since residency is no longer a legal requirement I suspect this is no longer true.
The article on this page provides a fuller explanation:
When we went down to the Centro de Salud yesterday, Pam was seen by the doctor but because her temporary medical card had expired she only got a statement about which medicines she needed. If she takes this to the chemist he will sell her the drugs at the box price rather than the prescription price.
The previous doctor we were assigned to didn't really take much notice of the date on your medical card and just gave you a prescription. The new doctor is obviously playing by the rules. Actually I suspect that he should charge for his consultation but he hasn't gone that far yet.
Since our E106s are still valid we should have gone back and renewed our temporary cards when they expired. That way Pamela would have got a green prescription (one that you pay for) rather than the statement. Come April, Pam and I will be eligible for E121s which will solve the problem for us.