Are you talking about the bearing in the rear sprocket coupling (hub)? That bearing isn't sealed like wheel bearings. There's a seal that should be in place too, but the bearing itself isn't sealed. Inspecting this bearing is part of the wheel bearing damage inspection process (2-29 in service manual), every 7500 miles.
I recommend taking advantage any time you remove the rear tire to inspect it (see 11-14), and repack it. There's no reason not to. If over time this bearing grease has been washed and rinsed away, and never periodically inspected and packed it's no wonder it's rusty and falling apart at 20k miles. That's a sign of neglect, not a quality or expected useful life issue.
Washing your bike
If you're using a power washer, stop it. This is definitely blowing right by seals and probably other things. Hand wash only, using low pressure water to rinse the bike down. If you've been power washing your bike it's whole life, I'd expect the whole thing to start falling apart just like that bearing about any time now.
Time to reset your maintenance schedule
When someone buys a used bike and ask me, this is what I recommend to them unless they have both documented and physical evidence maintenance was performed. This way you know exactly where your bike sits maintenance wise.
Your bike has symptoms of neglect. My guess is your rear suspension parts, steering head bearings, haven't been greased in all that time either and probably are just as dry as your coupling bearing. Fork oil breaks down over time, might be due to be changed. Whens the last time a real bolt tightening inspection was performed? If hydraulic fluids haven't been changed I'd guess you'd find some pretty nasty gunk in those system.
Generally we take cars a little for advantage. It's just kind of the 'murican way. You can't do this with your motorcycle. Being on 2 wheels changes everything.