problem with hot water tank
Typical water heaters/tanks do rust out over time, especially if the sacrificial anode isn't replaced periodically. If yours is failing, get it replaced. You'll probably get better fuel efficiently from the new one too -- and you can almost certainly improve efficiency if you want to spend more and switch technologies. (I switched to a highly-insulated, stainless-steel "indirectly heated" tank which is warmed by a loop from my high-efficiency boiler; NOT a cheap investment but unlike typical water heaters it comes pretty close to being a one-time cost and it does reduce gas usage.)

Whether that has anything to do with your itching, gods only know. Medical diagnosis is out of scope for this discussion.