running H2O heater

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My 40 gallon water heater is about 15 years old. I don't think it's ever been replaced. We have very hard water, which apparently means lots of sediment. The inspector suggested that the sediment could be/is so high it is covering the heating element.
If so, does that result in a large increase in operating costs? Since I'm still getting hot water, the warranty co will not replace it.
Even so, would it be more cost efficient to replace it with a tankless heater? If I do that, do I need to also install a water softener?
I doubt that it's ever been drained. Will that help now, or cause problems?
Thanks,
Ofgift
edited to add that it's a gas heater, and would probably be replaced with a gas tankless one if I can.