Believe it or not some people do boil there media so it's understandable that some members thought you meant that you did.
Prime can give false-positives for ammonia with the API test kit but I haven't seen a false-positive as high as 0.5 - 1.0 ppm. In tests I've performed the highest I've seen was between 0.25 - 0.50 ppm and that was with a concentrated sample (5 drops Prime in 1 cup distilled water).
Because the reading is so high, I believe it's more likely you have chloramines in your tap water. The ammonia would be from the chloramines which are a bond of ammonia and chlorine. Prime breaks that bond, eliminates the chlorine, and detoxifies the ammonia. The ammonia is still present in the water so your kit will still give a reading for ammonia, but it's in another form - far less toxic - similar to ammonium.
Your filter bacteria don't discriminate between ammonia and ammonium. They should remove it within 12-24 hours. My tap water has roughly 1 ppm ammonia from chloramines and I experience something similar after water changes unless I remove the ammonia in a separate aging tank first. (There are other options available: reverse osmosis, 3 stage filtration.)
The only way to tell if you have chloramines is to test your tap water for ammonia as
Arkeon
suggested. If it tests positive for ammonia then you have chloramines.
Unless the media dried out, the bacteria are fine. Rinsing media is easy with a 5 gallon bucket. It's the perfect size to work with and you can rinse the sponges and media right next to your tank.
You'll probably find that nitrate-absorbing sponges just aren't worth the time and effort compared to the efficiency of large volume water changes. I do fin-level or 75%. There are some good products like Seachem Purigen which I'd recommend as supplements. But it's the large volume weekly water changes which are the engine that drive down nitrates.