The Advanced Premium Tax credit is based on the income of the person who claims them on their taxes at the end of the year. When you file your taxes, form 8962 must be included for anyone who had insurance through the marketplace and either had or wishes to claim the Premium Tax Credit.
Since your kids father reported his income, he received the Premium Tax Credit in advance so the amount he had to pay for their insurance was much lower. When your brother claims them, the credit is reconciled with his income and if he makes more than your brother, he would likely have to pay some or all of the credit that the kids father received. If your brothers household income is more than 400% of the Federal Poverty Level, then he will be required to repay the entire amount of premiums that your kids father received in advanced. If your brothers household income is less than 400% of the Federal poverty level, then he may have to pay back some but not necessarily all of the credit he was not eligible for.
Basically, the credit follows the person who is covered by the insurance, not the person who "purchased" the insurance. Any person that claims them as a dependent is then responsible for matching the credit to their income.
This can also work in reverse. If your kids father would make much more than your brother and your brother made $20,000, then your kids dad would pay more in premiums but your brother (if he is claiming your kids) would get the credit for the premiums paid.
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